Colorado's tax rates depend on what you're paying for

Colorado has three main taxes that affect residents and visitors: income tax, sales tax, and property tax. The rates vary by location and income level. Income tax is set by the state. Sales tax combines a state rate with local rates that differ by county and city. Property tax is assessed by county and depends on your home's value and local mill levies.

This guide explains what each rate is, where it applies, and how to find the exact percentage for your location.

Key Takeaways

  • Colorado's state income tax rate is 4.4% for all residents, one of the lowest in the nation.
  • Sales tax starts at 2.9% state rate but reaches 4% to 8% or higher when you add local taxes, which vary by county and city.
  • Property tax rates vary widely by county, ranging from roughly 0.4% to 0.6% of home value, plus local mill levies that can push the total higher.
  • You can find your exact local sales tax rate on your county assessor's website or by entering your address into the Colorado Department of Revenue calculator.

Colorado income tax: 4.4% flat rate for all earners

Colorado uses a flat income tax of 4.4%, meaning everyone pays the same percentage regardless of how much they earn. This applies to wages, self-employment income, investment gains, and most other sources of income. The 4.4% rate has been in place since 2000 and is one of the lowest state income tax rates in the United States.

The state does not use tax brackets or progressive rates. A person earning $30,000 pays 4.4% on their income, and a person earning $300,000 pays 4.4% on theirs. Federal income tax is separate and is not affected by Colorado's state rate.

Colorado residents also file federal taxes with the IRS. The state income tax is deductible on your federal return, but you will owe both the state and federal amounts.

Sales tax: State rate plus local additions

Colorado's state sales tax is 2.9%, but the actual rate you pay depends on where you shop. Most counties and cities add their own local sales tax on top of the state rate, bringing the total to between 4% and 8.3% depending on your location.

For example, Denver's combined rate is 8.81%, while some rural counties have rates closer to 4%. The local portion funds schools, transportation, and other services in your area. Sales tax applies to most goods and some services, though groceries and prescription medications are exempt.

To find your exact sales tax rate, enter your address into the Colorado Department of Revenue's sales tax lookup tool on their website, or contact your county assessor's office. Rates can change when local ballot measures pass, so checking before a large purchase is useful.

Property tax: County-based rates plus mill levies

Property tax in Colorado is calculated as a percentage of your home's assessed value, and the rate varies by county. The state assesses residential property at 6.45% of actual value, but counties explore different mill levy rates on top of that assessment.

A mill levy is a local tax rate expressed per $1,000 of assessed value. If your county's mill levy is 50 mills, you pay $50 per $1,000 of assessed value. Most Colorado counties' effective property tax rates (the total you actually pay) range from 0.4% to 0.6% of home value, though some areas with higher mill levies can reach 0.7% or more.

Your county assessor determines your home's assessed value every two years. You receive a notice of valuation in the mail and can appeal if you believe the assessment is too high. Property tax bills are due in April and October in most counties.

How to find your exact tax rates

For sales tax, use the Colorado Department of Revenue's online lookup tool. Enter your street address, city, and ZIP code, and it will show your combined state and local rate.

For property tax, contact your county assessor's office directly. They can tell you your home's assessed value, your county's mill levy, and your estimated annual tax bill. You can also find this information on your property tax notice or on your county's website.

For income tax, the rate is always 4.4% statewide, so no lookup is needed. However, the amount you owe depends on your total income and any deductions or credits you claim. The Colorado Department of Revenue publishes tax tables and worksheets each year to help you calculate what you owe.

Special tax situations in Colorado

Colorado offers property tax exemptions for seniors and disabled homeowners who meet income limits. If you are 65 or older or permanently disabled, you may be able to reduce your property tax bill. You must explore through your county assessor's office, and may be able to access depends on your household income and home value.

Colorado also has tax credits for renters, low-income families, and people with dependents. These reduce the amount of income tax you owe. The Earned Income Tax Credit (EITC) and the Colorado Child Dependent Care Credit are two common examples. You claim these on your state tax return.

If you work in one state but live in another, Colorado has reciprocal tax agreements with some neighboring states. These agreements prevent you from paying income tax in both states on the same income. Check with the Colorado Department of Revenue if your situation applies.

Frequently Asked Questions

Is Colorado's 4.4% income tax the lowest in the country?

No, but it is among the lowest. Nine states have no income tax at all. Several others have rates below 4.4%, including Indiana (3.15%), Pennsylvania (3.07%), and Illinois (4.95%). Colorado's 4.4% is competitive but not the absolute lowest.

Do I pay sales tax on groceries in Colorado?

No. Groceries and food items intended for home consumption are exempt from Colorado sales tax. This includes meat, produce, dairy, and packaged foods. Prepared foods, restaurant meals, and items like candy and soda are taxed.

Can I appeal my property tax assessment?

Yes. If you believe your home's assessed value is too high, you can file an appeal with your county assessor. The important date is usually 30 days after you receive your notice of valuation. You will need to provide evidence, such as recent appraisals or comparable home sales in your area.

What is the difference between mill levy and property tax rate?

A mill levy is the local tax rate per $1,000 of assessed value. Property tax rate is the total percentage of your home's value you pay, including the state assessment rate and all local mill levies combined. Your county assessor can explain both figures on your tax bill.

Do I owe Colorado income tax if I moved here mid-year?

Yes, if you were a Colorado resident for any part of the tax year, you owe state income tax on income earned while you lived here. If you moved from another state, you may owe taxes to both states on income earned before you moved. File a part-year resident return with Colorado and check the other state's rules.