Colorado's sales tax is a 2.9% state tax added to most purchases, plus local taxes that vary by county and city

Colorado charges a state sales tax of 2.9% on most goods and some services. On top of that, your county and city add their own local sales taxes. The total you pay at checkout depends on where you live — a purchase in Denver will have a different total tax rate than the same purchase in Boulder or a rural area. The state collects its portion and sends it to the Colorado Department of Revenue; local governments keep their portion.

Sales tax is added at the register, not included in the price tag. If an item costs $10 and your total tax rate is 8%, you pay $10.80. Colorado does not have a state income tax, so sales tax is one of the main ways the state funds schools, roads, and public services.

Key Takeaways

  • Colorado's state sales tax is 2.9%, but your actual rate is higher because counties and cities add their own local taxes on top.
  • Local sales tax rates range from about 4% to over 8% depending on your county and city, so the total you pay varies by location.
  • Most physical goods are taxed, but groceries, prescription medications, and some medical equipment are exempt from Colorado sales tax.
  • Online purchases from out-of-state sellers are subject to Colorado sales tax if the seller has a physical presence or meets sales thresholds in the state.

How local sales tax is added to the state rate

Your total sales tax rate is the state 2.9% plus whatever your local government charges. A county might add 3%, and a city within that county might add another 2%, bringing your total to 7.9%. These local rates are set by county commissioners and city councils, not by the state, so they differ widely across Colorado.

Some counties have no additional local tax beyond the state rate, while others add 4% or more. Cities can also impose their own tax on top of the county rate. The result is that sales tax in one Colorado town can be significantly lower or higher than in another town 30 miles away. When you buy something, the retailer's register is programmed with the tax rate for that specific address.

What is taxed and what is not

Colorado taxes most physical goods — clothing, electronics, furniture, cars, and household items all have sales tax added. Services are usually not taxed, though there are exceptions. A haircut is not taxed, but a car wash is. Repairs to items you own are generally not taxed, but new construction materials are.

Several categories are exempt from sales tax. Groceries and food for home consumption are not taxed. Prescription medications are exempt. Medical equipment prescribed by a doctor — such as wheelchairs, hearing aids, or diabetic supplies — is not taxed. Certain agricultural equipment used in farming is also exempt. If you are unsure whether a specific item is taxed, the retailer or the Colorado Department of Revenue website can tell you.

Sales tax on online and out-of-state purchases

If you buy something online from a company that has a warehouse, office, or other physical location in Colorado, that purchase is subject to Colorado sales tax. If the seller meets Colorado's economic nexus threshold — which is $100,000 in sales or 200 transactions in the state in the previous calendar year — they must collect and remit Colorado sales tax even if they have no physical presence here.

This means that many large online retailers now collect Colorado sales tax automatically at checkout. If a seller does not collect it, you may be responsible for reporting and paying the tax yourself on your state income tax return, though most individual purchases below a certain threshold are not enforced. When in doubt, check the retailer's tax policy or contact the Colorado Department of Revenue.

Local tax rates vary significantly by location

Denver's combined sales tax rate is 8.81%. Boulder is 8.81%. Fort Collins is 8.3%. Smaller towns and rural areas may be lower or higher depending on what their county and city have voted to impose. Some areas use sales tax revenue for specific purposes — a city might dedicate a portion to public transit, schools, or parks.

If you live near a county or city border, you might notice that the same item costs a different amount in tax depending on which side of the line you shop on. This is why some people travel to lower-tax areas for large purchases, though the difference is usually small unless you are buying something expensive. You can find your exact local rate by entering your address on the Colorado Department of Revenue website or asking a local retailer.

Who collects and uses sales tax revenue

Retailers collect sales tax at the point of sale and remit it to the Colorado Department of Revenue, which then distributes the state portion to state programs and sends the local portion to the appropriate county and city. The state uses its share for general operations. Local governments use their share for schools, libraries, police and fire departments, roads, and other services.

Some local sales taxes are temporary — a city might impose a tax for five years to fund a specific project, then let it expire. Others are permanent. When a local tax is set to expire, voters are usually asked whether to renew it. You can find information about what your local sales tax funds by contacting your city or county government office.

Frequently Asked Questions

Is Colorado sales tax the same everywhere in the state?

No. The state rate is 2.9% everywhere, but counties and cities add different amounts on top. Your total rate depends on your exact location. Two towns 10 miles apart can have different total rates.

Are groceries taxed in Colorado?

No. Food you buy at a grocery store for home consumption is not taxed. This includes fresh produce, meat, dairy, and packaged foods. Hot prepared food from a restaurant or deli counter is taxed.

Do I pay sales tax on online purchases from out-of-state companies?

If the company has a physical presence in Colorado or meets the sales threshold, yes — they must collect Colorado sales tax. If they do not, the tax responsibility technically falls on you, though enforcement is rare for individual purchases.

What happens if a retailer does not charge me sales tax?

The retailer is responsible for collecting and remitting the tax. If they fail to do so, that is a problem between them and the state, not your responsibility. You are not liable for a retailer's failure to collect.

Can I get a sales tax refund when I leave Colorado?

Colorado does not have a sales tax refund program for visitors or people leaving the state. Once you pay sales tax, it is final. Some states offer refunds to international tourists, but Colorado does not.