Colorado's statewide sales tax is 4.63 percent

Colorado charges a state sales tax of 4.63 percent on most retail purchases. This is the base rate that applies everywhere in the state. However, your actual sales tax bill is usually higher because counties and cities add their own local taxes on top of the state rate. The total you pay at checkout depends on where you live and shop.

The state rate has been 4.63 percent since 2013. Before that, Colorado's sales tax was lower, but the rate increased as part of a statewide budget measure. Unlike income tax, which varies based on what you earn, sales tax is the same percentage whether you buy a dollar item or a thousand-dollar item.

Key Takeaways

  • Colorado's state sales tax is 4.63 percent, but your total tax rate includes local county and city taxes added on top.
  • Combined sales tax rates across Colorado range from around 5 percent to over 8 percent depending on your location.
  • Groceries, prescription medications, and medical equipment are exempt from Colorado sales tax.
  • Services like haircuts, repairs, and labor are generally not subject to sales tax in Colorado, though some exceptions exist.
  • Online purchases from out-of-state sellers are subject to Colorado sales tax if the seller has a physical presence or meets certain sales thresholds in the state.

How local taxes stack on top of the state rate

Every county in Colorado adds its own sales tax on top of the 4.63 percent state rate. County rates range from 0.25 percent to 3 percent, depending on the county. Then cities and special districts can add even more. This means your total sales tax can be anywhere from about 5 percent in some areas to over 8 percent in others.

For example, Denver County charges 3.62 percent in local taxes, which combined with the state rate brings the total to 8.25 percent. Boulder County adds 2.9 percent locally, for a combined rate of 7.53 percent. A smaller county like Kiowa adds only 0.25 percent locally, resulting in a combined rate of 4.88 percent. You can find your exact local rate by entering your address on the Colorado Department of Revenue website or asking a local retailer.

What is exempt from Colorado sales tax

Colorado does not charge sales tax on groceries, which includes food you buy to cook at home. This covers items like bread, milk, vegetables, meat, and canned goods. However, prepared foods—items you buy ready to eat, like restaurant meals, deli sandwiches, or hot pizza—are taxed. The line is whether the food is meant to be eaten when ready or taken home to prepare.

Prescription medications are also exempt from sales tax in Colorado. Over-the-counter medicines like aspirin or cold medicine are taxed, but prescription drugs filled at a pharmacy are not. Medical equipment prescribed by a doctor, such as wheelchairs, crutches, or diabetic testing supplies, is exempt as well.

Services are generally not subject to sales tax in Colorado. This includes haircuts, car repairs, plumbing work, and labor charges. However, if you buy a product as part of that service—such as paint during a painting job or parts during a repair—the product portion may be taxed depending on how the invoice is written.

Sales tax on online and out-of-state purchases

If you buy something online from an out-of-state seller, you may still owe Colorado sales tax. The rule depends on whether the seller has what the law calls "nexus" in Colorado—meaning a physical location, employees, or significant sales activity in the state. Large online retailers like Amazon collect Colorado sales tax because they meet these thresholds. Smaller sellers may not.

If a seller does not collect Colorado sales tax at checkout, you are technically responsible for paying "use tax" on that purchase when you file your state income tax return. In practice, most individual shoppers do not report these purchases. However, if you run a business or make large purchases, keeping records of out-of-state purchases is important for tax filing.

Special sales tax situations in Colorado

Colorado has a few categories that receive special treatment. Clothing and footwear are taxed normally—there is no clothing exemption in Colorado like some states have. Motor vehicles are subject to sales tax, and the tax is calculated on the purchase price. Trade-in value does not reduce the taxable amount; you pay tax on the full sale price.

Marijuana purchases in Colorado are subject to both state and local sales tax, plus additional marijuana-specific taxes. The combined tax on cannabis can reach 20 percent or higher depending on location and product type. Alcohol is also taxed at the regular sales tax rate, plus excise taxes that vary by type of beverage.

How to find your exact local sales tax rate

Your exact sales tax rate depends on your specific address, not just your city or county. Special taxing districts can add small percentages on top of county and city rates. The easiest way to find your rate is to visit the Colorado Department of Revenue's sales tax lookup tool on their website. Enter your address, and it will show you the combined state, county, city, and district rates that explore to you.

You can also call your city or county assessor's office, or ask a local business like a grocery store or gas station what their sales tax rate is. They deal with this every day and can tell you the exact percentage charged in your area. If you are shopping in a different city or county, the rate will be different, so it is worth checking before making a large purchase if the tax difference matters to your budget.

Frequently Asked Questions

Do I pay sales tax on groceries in Colorado?

No, groceries are exempt from sales tax in Colorado. This includes items like bread, milk, vegetables, meat, and canned goods that you buy to cook at home. However, prepared foods like restaurant meals, deli sandwiches, and hot pizza are taxed at the regular rate.

What is the difference between sales tax and use tax?

Sales tax is charged by the seller when you buy something. Use tax is a tax you owe on purchases where sales tax was not collected—usually out-of-state online purchases. You are supposed to report use tax on your state income tax return, though most individual shoppers do not.

Why is my sales tax different from the city next to mine?

Each county, city, and special district in Colorado sets its own local tax rate on top of the 4.63 percent state rate. Two cities just a few miles apart can have different combined rates. Your exact rate depends on your specific address, not just your city.

Do I pay sales tax on services like haircuts or car repairs?

No, services themselves are not taxed in Colorado. However, if a product is included—like shampoo at a salon or parts at a repair shop—the product portion may be taxed depending on how the invoice is itemized.

Is marijuana taxed differently than other products in Colorado?

Yes, marijuana is subject to regular sales tax plus additional marijuana-specific taxes. The combined tax on cannabis can be 20 percent or higher depending on your location and the type of product. Alcohol is also taxed at the regular rate plus excise taxes.