Denver's sales tax rate and what it covers

Denver's combined sales tax rate is 10.25%. This total comes from three layers: Colorado's state sales tax of 4%, Denver's city sales tax of 3.62%, and a regional tax of 2.63% that covers the metro area. When you buy something in Denver, all three taxes stack on top of the price.

Not everything you buy is taxed at this rate. Groceries — unprepared food you cook at home — are taxed at a lower rate of 4% in Colorado, which means you pay only the state rate plus Denver's city portion, skipping the regional tax. Prepared food, restaurant meals, and anything you eat in a store is taxed at the full 10.25%.

Clothing and shoes are taxed normally in Denver. Medicine you buy over the counter without a prescription is also taxed. Prescription medications are not taxed in Colorado.

Key Takeaways

  • Denver's combined sales tax is 10.25%, made up of state (4%), city (3.62%), and regional (2.63%) taxes.
  • Groceries — unprepared food you cook at home — are taxed at 4% instead of the full rate.
  • Restaurant meals and prepared food are taxed at the full 10.25%.
  • Prescription medications are not taxed; over-the-counter medicines are taxed normally.

Where Denver's sales tax money goes

The 3.62% city portion funds Denver's general operations — police, fire, parks, and public services. The 2.63% regional tax is split among several purposes. Part of it goes to the Regional Transportation District (RTD), which runs Denver's buses and light rail. Another portion funds the Scientific and Cultural Facilities District (SCFD), which supports museums, zoos, and cultural institutions across the metro area.

When you pay sales tax in Denver, you are funding services you may use directly — a bus ride, a museum visit — or services that benefit the city overall, like police response times and street maintenance.

Sales tax on services and digital goods

Most services in Denver are not taxed. A haircut, a plumber's labor, a doctor's visit — these are not subject to sales tax. However, some services are taxed. Repair and alteration services on tangible goods (fixing a watch, hemming pants) are taxed. Cleaning services, pest control, and landscaping are taxed in Denver.

Digital goods and subscriptions fall into a gray area. Streaming services like Netflix and music services like Spotify are taxed in Colorado as of 2023. E-books are not taxed. Software licenses and cloud storage subscriptions are taxed. The rule is roughly: if it is a service delivered digitally that replaces something physical you would have bought, it is likely taxed.

How sales tax is calculated and charged

Stores calculate sales tax on the subtotal before any discounts are applied. If you buy a $100 item with a 10% coupon, the store subtracts the coupon first ($90), then adds 10.25% tax ($9.23), for a total of $99.23. Some stores round the final total to the nearest cent.

Online purchases from out-of-state sellers used to avoid Denver sales tax, but that changed in 2018. Now, large online retailers like Amazon collect Denver sales tax on orders shipped to Denver addresses. Smaller sellers may not collect it, and in those cases, Colorado law technically requires you to report the purchase on your state tax return and pay "use tax" — which is the same rate as sales tax. In practice, most individuals do not report these purchases.

Sales tax on vehicles and large purchases

When you buy a car in Denver, sales tax applies to the purchase price. The rate is the full 10.25%. If you trade in a vehicle, the tax is calculated on the difference between the new car's price and the trade-in value, not the full price. A $30,000 car with a $10,000 trade-in is taxed on $20,000, not $30,000.

If you buy a car outside Denver and drive it into the city, you may owe use tax to Colorado when you register it. The amount depends on where you bought it and what tax you already paid. Check with the Colorado Department of Revenue if you are unsure.

Resale certificates and tax-exempt purchases

If you run a business and buy goods to resell, you can use a resale certificate to avoid paying sales tax on those purchases. You provide the certificate to the seller, and they do not charge tax. You then collect tax from your customers when you sell the goods. Resale certificates are issued by the Colorado Department of Revenue and are specific to your business.

Nonprofits, government agencies, and certain other organizations can also be exempt from sales tax. The process requires registering with the state and obtaining an exemption certificate. A nonprofit cannot straightforward claim exemption — the organization must be registered and the seller must have the certificate on file.

How to understand your receipt

Your receipt shows the subtotal, the sales tax amount, and the total. The sales tax line should show 10.25% of the subtotal (or 4% for groceries). If you want to verify the math: multiply the subtotal by 0.1025 and round to the nearest cent. That is what you should see on the receipt.

If you notice the tax rate is wrong — for example, if groceries were taxed at 10.25% instead of 4% — you can ask the cashier or manager to correct it. Mistakes happen, especially at self-checkout or when a cashier rings up an item in the wrong category.

Frequently Asked Questions

Is Denver sales tax higher than other Colorado cities?

Denver's 10.25% rate is higher than many other Colorado cities. Fort Collins is 8.6%, Colorado Springs is 8.15%, and some smaller towns are lower. The difference is the regional tax (2.63%) that applies in the Denver metro area. If you live outside Denver but shop there, you pay Denver's rate.

Do I pay sales tax if I buy something online and pick it up in Denver?

Yes. If the store has a physical location in Denver and you pick up there, Denver sales tax applies. The tax is based on where the item is picked up, not where you ordered it from.

What counts as a grocery item that is taxed at 4%?

Unprepared food you cook at home — meat, vegetables, bread, milk, eggs, canned goods — is taxed at 4%. Hot food from a deli counter, rotisserie chicken, prepared salads, and anything meant to eat right away is taxed at 10.25%. When in doubt, ask the cashier how the item is categorized in their system.

Can I get a refund of sales tax if I return something?

Yes. When you return an item and get a refund, the store refunds the full amount including tax. If you exchanged the item for something else, the tax is recalculated on the new item's price.

Do I owe sales tax on used items I buy from a private person?

No. Sales tax applies only to sales by businesses, not to private sales between individuals. If you buy a used car, furniture, or clothes from someone on Craigslist or Facebook Marketplace, there is no sales tax. If you buy from a used goods store or pawn shop, sales tax applies because those are businesses.