Colorado has a state sales tax of 2.9 percent, plus local taxes that vary by county and city

Colorado's state sales tax rate is 2.9 percent, one of the lowest in the country. However, most purchases in Colorado are subject to additional local sales taxes on top of the state rate. These local taxes are set by individual counties and cities, so your total sales tax depends on where you make the purchase. A single item might be taxed at 4 percent in one town and 8 percent in another, even within the same county.

The total sales tax you pay is the combination of the state rate plus all applicable local rates. For example, if you buy something in Denver, you pay 2.9 percent state tax plus Denver's local tax of 3.62 percent, for a total of 6.52 percent. In Boulder, the same item would be taxed at 2.9 percent state plus 4.15 percent local, totaling 7.05 percent. These rates change periodically, so checking your specific city or county is the only way to know the exact amount you will pay.

Key Takeaways

  • Colorado's state sales tax is 2.9 percent, but local taxes on top of that range from less than 1 percent to over 4 percent depending on your city and county.
  • The total sales tax you pay at checkout is the state rate plus all local rates that explore to your location.
  • Groceries, prescription medications, and medical equipment are exempt from Colorado sales tax, though prepared foods and non-prescription items are taxed.
  • Online purchases from out-of-state sellers may or may not include Colorado sales tax depending on the seller's policies and the type of item.
  • Local tax rates change throughout the year as cities and counties adjust their budgets, so the rate you paid last month may not be the rate today.

What items are exempt from Colorado sales tax

Not everything you buy in Colorado is subject to sales tax. Groceries — food you take home to cook — are not taxed. This includes meat, produce, dairy, bread, and canned goods. However, prepared foods, restaurant meals, and items like candy, soda, and hot deli items are taxed as food prepared for when ready consumption.

Prescription medications are also exempt from sales tax in Colorado. Over-the-counter medicines like pain relievers, cold medicine, and vitamins are taxed, but anything you need a prescription to buy is not. Medical equipment prescribed by a doctor — such as wheelchairs, crutches, and diabetic supplies — is exempt as well.

Clothing and footwear have no state sales tax in Colorado, though some local jurisdictions add their own tax on these items. Before assuming clothing is tax-free, check your specific city or county rules. Services like haircuts, repairs, and labor are generally not subject to sales tax, but the materials used in those services may be.

How local sales tax rates are set and where to find yours

Each Colorado county and city sets its own local sales tax rate within state limits. A county might set a base local rate, and then individual cities within that county can add additional tax on top. This is why two towns 10 miles apart can have very different total rates. Local taxes fund schools, roads, public safety, and other services specific to that area.

To find your exact local sales tax rate, search online for "[your city] sales tax rate" or "[your county] sales tax rate." The Colorado Department of Revenue maintains a list of all local rates by jurisdiction, updated regularly. Your city or county assessor's office can also tell you the current rate. Keep in mind that rates can change mid-year if a city or county passes a new tax measure, so the rate you paid in January may not be the rate in July.

Sales tax on online and out-of-state purchases

When you buy something online from a large retailer like Amazon or Walmart, Colorado sales tax is usually added automatically at checkout if the seller has a physical presence in Colorado or meets certain sales thresholds. Smaller online sellers may not collect Colorado tax, which means you technically owe the tax yourself when you file your state income tax return — though most people do not report this.

If you order from a seller outside Colorado, whether they collect Colorado tax depends on their business structure and sales volume. As of 2024, most major online retailers collect sales tax in Colorado, but some smaller sellers do not. There is no way to know for certain until you reach checkout. If you are unsure whether tax was included, check your receipt or contact the seller's customer service.

Digital products like e-books, software, and streaming subscriptions are generally not subject to Colorado sales tax, though this can vary depending on how the product is classified and delivered. Music and video downloads are typically not taxed, but digital services like cloud storage may be.

How sales tax is used in Colorado

Colorado's 2.9 percent state sales tax revenue goes to the state's general fund, which supports education, transportation, health services, and other state programs. Local sales taxes are kept by the city or county that collects them and fund services like police and fire departments, schools, libraries, parks, and road maintenance.

Some Colorado cities and counties have passed temporary sales tax increases to fund specific projects — such as a new transit system or school renovations — that expire after a set number of years. When these temporary taxes end, the total rate you pay decreases. Checking your local government's website can tell you whether any temporary taxes are currently in effect in your area and when they are scheduled to end.

Frequently Asked Questions

Do I pay sales tax on groceries in Colorado?

No, groceries are exempt from Colorado sales tax. This includes raw meat, produce, dairy, bread, and canned goods. However, prepared foods like deli items, hot foods, candy, and soda are taxed as food prepared for when ready consumption.

What is the highest sales tax rate in Colorado?

The highest combined state and local sales tax rates in Colorado are around 8 to 8.5 percent, found in some cities in the Denver metro area and other urban centers. Rural areas often have lower rates because they have fewer local taxes added on top of the state rate.

Do I owe sales tax on items I buy outside Colorado and bring home?

If you buy something in another state and bring it to Colorado, you do not owe Colorado sales tax on it. However, if you order something online from a Colorado seller while you are out of state, you may owe Colorado tax depending on the seller's policies.

Can Colorado cities add sales tax without a vote?

Most local sales tax increases in Colorado require voter approval, though the rules vary by city and county. Some jurisdictions can raise existing taxes without a vote, but new taxes usually require a ballot measure. Check your local government website to see what taxes are currently in effect and whether any are scheduled for a vote.

Is there a sales tax on services in Colorado?

Most services like haircuts, repairs, and labor are not subject to Colorado sales tax. However, the materials used in those services may be taxed. For example, a haircut itself is not taxed, but if you buy hair products at a salon, those products are taxed.