Denver's sales tax rate and what it covers

Denver's combined sales tax rate is 10.25 percent as of 2024. This rate is made up of three parts: Colorado's state sales tax of 4 percent, Denver's city sales tax of 3.62 percent, and a regional tax of 2.63 percent that covers the metro area. The rate applies to most goods you buy in Denver, including clothing, electronics, groceries, and prepared food.

Some items are taxed differently or not at all. Unprepared groceries — raw meat, produce, dairy, bread — are taxed at a lower rate of 4 percent (state tax only). Prescription medications are not taxed. Gasoline has its own separate excise tax on top of sales tax. Services like haircuts, repairs, and labor are generally not subject to sales tax in Colorado, though some cities have added local taxes on specific services.

The 10.25 percent rate applies when you shop in Denver proper. If you buy something in a different Colorado city or county, the rate will be different because each area sets its own local and regional taxes. Online purchases shipped to a Denver address are taxed at Denver's rate.

Key Takeaways

  • Denver's sales tax is 10.25 percent, made up of state (4 percent), city (3.62 percent), and regional (2.63 percent) taxes.
  • Unprepared groceries are taxed at 4 percent only, while prescription medications are not taxed at all.
  • Services like haircuts and repairs are not subject to sales tax in Colorado.
  • The rate you pay depends on where you make the purchase; other Colorado cities have different combined rates.

How the three layers of Denver sales tax work

Colorado's state sales tax of 4 percent goes to the state government and funds state services. Denver's city portion of 3.62 percent stays in Denver and supports city operations. The regional tax of 2.63 percent is the Regional Transportation District (RTD) tax, which funds public transit, buses, and light rail in the Denver metro area.

When you pay at the register, you see only the total 10.25 percent. The store collects all three portions and sends them to the appropriate government bodies. You do not pay each layer separately — the cashier rings up the combined amount.

The RTD tax was approved by voters in the Denver metro area and has been in place since 2004. It is the reason Denver's rate is higher than many other Colorado cities that do not have a regional transit tax. If you live outside the RTD district but shop in Denver, you still pay the full 10.25 percent.

What items are taxed and what are not

Most physical goods are taxed at the full 10.25 percent rate. This includes clothing, shoes, furniture, appliances, books, toys, and electronics. Restaurant meals and prepared food are taxed. Alcohol and tobacco have additional excise taxes on top of sales tax.

Unprepared food is the main exception. If you buy raw chicken, vegetables, milk, eggs, or bread from a grocery store, you pay only 4 percent state tax. The city and regional portions do not explore to these items. This distinction matters: a rotisserie chicken from the deli counter is prepared food and taxed at 10.25 percent, but a raw chicken from the meat case is taxed at 4 percent.

Services are generally not taxed. A haircut, car repair, plumbing work, or medical visit does not have sales tax added. However, if you buy a product as part of that service — like hair dye or replacement parts — the product portion may be taxed depending on how the business separates the charges.

Sales tax rates in other Colorado cities

Denver's 10.25 percent is higher than most other Colorado cities because of the RTD tax. Colorado Springs has a combined rate of 8.3 percent. Fort Collins is 8.6 percent. Boulder is 8.81 percent. Smaller towns and rural areas often have lower rates because they do not have regional transit taxes or as many local taxes.

If you shop online and have the item shipped to an address outside Denver, the sales tax will be based on the destination address. Shipping to Colorado Springs means you pay Colorado Springs' rate, not Denver's. This matters for large purchases where the tax difference can be significant.

Some Colorado counties have added local taxes on top of the state rate. El Paso County (Colorado Springs) and Boulder County each have their own local portions. The state rate of 4 percent is the same everywhere in Colorado, but the local and regional portions vary widely.

How sales tax is collected and reported

Retailers collect sales tax at the point of sale and hold it until they file a sales tax return. Most businesses file monthly with the Colorado Department of Revenue, though some file quarterly or annually depending on their sales volume. The retailer is responsible for sending the correct amount to the state, which then distributes it to Denver and the RTD.

You do not file sales tax yourself as a consumer. The store handles all reporting. However, if you run a small business or sell items online, you may need to register for a sales tax license and collect tax from your customers. This depends on your business structure and where your customers are located.

Online retailers are required to collect and send sales tax on purchases shipped to Colorado addresses. This rule applies whether the retailer has a physical location in Colorado or not. If a retailer fails to collect tax, the state can pursue them for back taxes and penalties.

When you do not pay sales tax in Denver

Resale certificates allow businesses to buy items without paying sales tax if they plan to resell them. A clothing store, for example, does not pay sales tax when it buys inventory from a wholesaler. The tax is collected later when the customer buys the item in the store.

Nonprofit organizations registered with the state may be exempt from sales tax on certain purchases. This exemption is limited and requires documentation. A nonprofit cannot straightforward claim exemption — it must have a valid exemption certificate from the Colorado Department of Revenue.

Items purchased for resale or with a valid exemption certificate are the main exceptions. Tourists and out-of-state residents do not get a break on sales tax — you pay the full rate regardless of where you live.

Frequently Asked Questions

Is sales tax included in the price shown on the shelf?

No. Prices on shelves and price tags in Denver do not include the 10.25 percent sales tax. The tax is added at checkout. This is standard across Colorado and most of the United States. The final amount you pay will be higher than the labeled price.

Do I pay sales tax on groceries in Denver?

It depends on what you buy. Unprepared groceries like raw meat, fresh produce, milk, and bread are taxed at 4 percent only. Prepared foods, deli items, and anything from the hot case are taxed at the full 10.25 percent. Candy and soft drinks are taxed at the full rate even though they are food.

Why is Denver's sales tax higher than other Colorado cities?

Denver includes a 2.63 percent regional tax that funds the Regional Transportation District (RTD), which operates buses and light rail in the metro area. Most other Colorado cities do not have this regional transit tax, so their combined rates are lower. Colorado Springs and Fort Collins have their own local taxes but no RTD tax.

Do I pay sales tax on online purchases shipped to Denver?

Yes. Online retailers are required to collect and send Denver's 10.25 percent sales tax on items shipped to Denver addresses. This applies whether the retailer has a store in Colorado or operates only online. The tax is added during checkout or on your receipt.

What happens if a store charges me the wrong sales tax?

If you notice the tax charged does not match the 10.25 percent rate, ask the cashier or manager. Errors happen, especially with items that have different tax rates like groceries. Most stores will correct the charge when ready. If you believe a store is systematically undercharging or overcharging tax, you can report it to the Colorado Department of Revenue.