Colorado's Sales Tax Rate and What It Covers

Colorado's statewide sales tax rate is 4.63 percent. This is the base rate that applies everywhere in the state, but your actual tax depends on where you shop — most cities and counties add their own local sales tax on top of the state rate, bringing your total to somewhere between 4.63 percent and 8.3 percent depending on your location.

Sales tax in Colorado applies to most tangible goods you buy in stores — clothing, groceries, electronics, furniture, and household items all get taxed. Services like haircuts, car repairs, and plumbing are generally not taxed. Some items have special rules: groceries for home consumption are taxed at a lower rate (2.9 percent state tax instead of the full 4.63 percent), and certain medical equipment and prescription drugs are exempt entirely.

When you buy something, the store collects the tax at the register and sends it to the state and local governments. You do not pay sales tax separately — it is added to your total bill before you pay.

Key Takeaways

  • Colorado's base sales tax is 4.63 percent statewide, but most cities and counties add local tax on top, making your total rate between 4.63 and 8.3 percent.
  • Groceries for home use are taxed at only 2.9 percent state tax, while most other goods pay the full rate.
  • Services like haircuts and repairs are not subject to sales tax in Colorado.
  • The store collects and remits sales tax to the state and local government, so the tax is included in your final bill at checkout.
  • Your exact tax rate depends on your city and county, so two Colorado towns can have different totals for the same purchase.

How Local Sales Tax Adds to the State Rate

Every Colorado city and county can set its own local sales tax rate on top of the state's 4.63 percent. Denver's local rate is 3.62 percent, for example, making the total 8.25 percent. Boulder adds 2.9 percent locally, bringing its total to 7.53 percent. Smaller towns may add less — some add only 1 percent or 2 percent.

This means the same item costs different amounts in tax depending on where you buy it. A $100 item in Denver costs $8.25 in sales tax, but the same item in a town with only 1 percent local tax costs $5.63 in tax. Online purchases complicate this further: if you order from an out-of-state seller, Colorado sales tax may not explore at all, though this has changed in recent years as more online retailers have begun collecting Colorado tax.

You can find your exact local rate by entering your address on the Colorado Department of Revenue website or by asking a store in your area. The rate can change if your city or county votes to adjust it, though this happens infrequently.

What Is and Is Not Taxed in Colorado

Most items you buy in a store are taxed, but Colorado has a long list of exceptions. Groceries you take home to cook — meat, vegetables, bread, milk, eggs — are taxed at the lower 2.9 percent rate, not the full sales tax rate. This applies only to food you prepare yourself; restaurant meals and prepared foods are taxed at the full rate.

Prescription medications and certain medical devices are not taxed at all. Clothing and shoes are taxed normally. Services are generally not taxed: when you pay a plumber, electrician, or mechanic, you pay no sales tax on their labor, though you do pay tax on any parts they install. Haircuts and salon services are not taxed. Utilities like electricity and natural gas are not subject to sales tax.

Some items fall into gray areas. Vitamins and over-the-counter medicines are taxed because they are not prescription items. Candy and soft drinks are taxed, even though they are food. If you are unsure whether something is taxed, the store's receipt will show it, or you can call the Colorado Department of Revenue.

Sales Tax on Online and Out-of-State Purchases

If you order something online from a Colorado business, Colorado sales tax applies just as it would if you walked into their store. The tax rate depends on where the item is being shipped — your local rate, not the seller's location.

Out-of-state sellers are more complicated. For many years, if a company had no physical location in Colorado, they did not collect Colorado sales tax. That changed in 2018 when Colorado began requiring large online retailers to collect and remit sales tax. Today, most major online retailers — Amazon, Walmart, Target, and others — collect Colorado sales tax on orders shipped to Colorado addresses. Smaller sellers may not, and you technically owe "use tax" on those purchases when you file your state income tax, though most people do not report it.

If you buy something in person while traveling out of state and bring it back to Colorado, you do not owe Colorado sales tax on it — you already paid the other state's tax.

Who Pays Sales Tax and When

You, the buyer, pay sales tax whenever you purchase a taxable item in Colorado. The store collects it from you at the register and sends it to the state and local government on a schedule — usually monthly or quarterly depending on the store's size and sales volume.

Businesses that buy items for resale do not pay sales tax on those purchases. A clothing store buying inventory from a manufacturer does not pay sales tax; instead, they collect it from customers and remit it. This is why you need a resale certificate if you own a business and buy wholesale goods.

If you are a Colorado resident and buy something out of state, you may owe use tax on it — a tax that functions like sales tax but applies to items purchased elsewhere. However, if the out-of-state seller already collected sales tax from you, you do not owe use tax on top of that. Most people do not track or report use tax, and enforcement is minimal for individual purchases.

How Sales Tax Affects Your Budget

Sales tax is not included in the price tags you see in Colorado stores — it is added at checkout. This means a $50 item actually costs you more than $50 depending on your location. In Denver, that $50 item costs $54.13. In a town with 5 percent total tax, it costs $52.50. This can add up quickly on large purchases like furniture or appliances.

Groceries are the exception: because they are taxed at only 2.9 percent instead of the full rate, your grocery bill is lower than it would be in a state with full sales tax on food. A $100 grocery purchase costs $102.90 in tax, not $104.63 to $108.30.

When budgeting for a major purchase, add your local sales tax rate to the price tag to see what you will actually pay. If you are moving to Colorado from another state, ask locals what the total rate is in your new city — it may be higher or lower than what you are used to.

Special Sales Tax Situations and Exemptions

Colorado offers a few special exemptions beyond the standard rules. Certain nonprofit organizations can get a sales tax exemption on purchases if they are registered with the state. Agricultural equipment used directly in farming may be exempt. Some energy-efficient appliances and solar equipment have received temporary tax breaks, though these change based on state law.

If you are buying something for a nonprofit organization you work with, ask whether they have a tax exemption certificate. If they do, you can use it to avoid paying sales tax on the purchase. The nonprofit must then remit the tax themselves or claim the exemption on their tax return.

Resale certificates are another exemption: if you own a business and buy inventory to resell, you do not pay sales tax on those purchases. You will need to register with the Colorado Department of Revenue and obtain a resale certificate to show to your suppliers.

Frequently Asked Questions

What is Colorado's total sales tax rate in my city?

Colorado's state rate is 4.63 percent, but your total depends on local additions. Denver is 8.25 percent, Boulder is 7.53 percent, and other cities vary. Enter your address on the Colorado Department of Revenue website to find your exact rate, or ask a store in your area.

Do I pay sales tax on groceries in Colorado?

Yes, but at a lower rate. Groceries for home consumption are taxed at 2.9 percent state tax, not the full 4.63 percent. Restaurant meals and prepared foods pay the full rate. This applies only to food you cook yourself at home.

Do I owe sales tax on items I buy online from out-of-state sellers?

Most large online retailers now collect Colorado sales tax on orders shipped to Colorado. Smaller sellers may not, and technically you owe "use tax" on those purchases, but enforcement is minimal for individual buyers. Check your receipt to see if tax was collected.

Are services like haircuts and car repairs taxed in Colorado?

No. Services are generally not subject to sales tax in Colorado. You pay no tax on the labor for haircuts, car repairs, plumbing, or electrical work. However, if the service includes parts or materials, you pay tax on those items.

What happens if I buy something in another state and bring it back to Colorado?

You do not owe Colorado sales tax on it. You already paid the other state's sales tax when you purchased it. Use tax applies only to items bought for use in Colorado without any sales tax being collected.