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Stuck on taxes, rather than your customers?We’ll tell you how
Home to the Rocky mountains, multiple rivers, and the hippie haven of Boulder, Colorado is a place for sports fans and nature lovers alike. One thing we don’t hear people rave about? The state’s sales tax.
If you’re selling in the Centennial state, you might be on the hook for collecting and remitting sales tax. How much should you charge, and how much will you owe? Let’s explore the basics of Colorado sales tax in this guide.
Sales Tax Rates in Colorado
Colorado uses a state-wide sales tax rate of only 2.9%, but most cities, counties or other local authorities apply an additional sales and use tax.
For instance, a tiny town called Dinosaur has a total rate of 4.9% because the county, Moffat, adds 2%. But a bigger city like Denver charges 8.81% because there are a few authorities at play: the city and county charges 4.81%, the Regional Transportation District adds 1%, and then the Scientific and Cultural Facilities District adds the last .1%.
To know for sure, check out the up-to-date list from the Colorado Department of Revenue. They even have a Sales Tax Rate Locator that you can use for a specific address!
What is taxable in Colorado?
- Tangible products are generally taxable in Colorado, with a few exceptions. You can find a list of examples in the next section!
- Services are generally not taxed, except for those falling under “rooms and accommodations,” telephone services and other utilities.
- Some digital products are taxed, some are not. Video/audio streaming services are taxed in Colorado, but pre-written software (like SaaS) is not.
Sales Tax Exemptions
Some purchases in the Centennial State are exempt from sales tax collection. A few include:
- Food, including food sold through vending machines
- Medical equipment and medicine
- School related sales
- Farm equipment
- Seeds, plants and trees
- Machinery and machine tools
- Renewable energy components
Certain types of customers are exempt from sales tax, too. Government agencies and some charities or non-profit organizations might not have to pay sales tax to you.
Making Sense of Colorado Taxes
If you’re confused about whether your goods are subject to sales tax in Colorado, we hear you. Collecting and remitting the correct amount of tax in the state is complicated – especially when you add the economic nexus and Amazon service into the equation.
Fortunately, you don’t have to go it alone. Sign up for a free trial with Quaderno to see how easy and pain-free tax collection can be with the right partner by your side.
For more detailed information, check out our Business Guide to Sales Tax in Colorado.
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the Tax Agency.