Denver Sales Tax Guide for Businesses

No matter where you live or where your online business is based — if you have customers in Denver, you must follow city and local sales tax rules in addition to Colorado’s rules. That’s what this guide is for! This guide includes everything you need to know about digital tax laws in Denver, whether your customers live in Cherry Creek or Five Points.

Denver Tax Jurisdiction Breakdown for 2025

• Colorado State Sales Tax: 2.9%
• Denver County Sales Tax: 0%
• Denver City Sales Tax: 5.15%
• RTD Tax: 1%
• Cultural and Facilities District: 0.10%

What is the sales tax rate in Denver, Colorado?

The minimum combined 2025 sales tax rate for Denver, Colorado is 9.15%. This is the total of state, county and city sales tax rates. The Colorado sales tax rate is currently 2.9%. The Denver County sales tax rate is 0%. The Denver sales tax rate is 5.15%. There is also an RTD tax of 1.00% and the Cultural Facilities District rate of .10%, bringing the total to 9.15%.

These rates go for standard taxable products. But other rates might apply to your business.

If you’re selling “vice” products like tobacco or alcohol, you might have an increased rate. Denver imposes additional taxes on marijuana.

If you’re selling essential items, such as medicine or clothing, or educational materials, you might have an exempt or reduced rate. More on that next!

What products are exempt from Denver sales tax rate?

• Food, including food sold through vending machines
• Residential Energy Usage - all gas, electricity, coal, wood and fuel oil
• Medical Equipment & Medicine
• Coins and Precious Metal Bullion
• Farm Equipment
• Seeds, Plants and Trees
• Pesticides
• Machinery and Machine Tools
• Sales of Low-Emitting Vehicles
• School Related Sales
• Renewable Energy Components
• Beetle Wood Products
• Space Flight
• Air Craft and Air Craft Parts

What digital products are taxed in Denver?

First, let’s confirm what you’re trying to sell in Denver. Are you selling digital products?

A digital product is any product that’s stored, delivered, and used in an electronic format. These are goods or services that the customer receives via email, by downloading them from the Internet, or through logging into a website.

You’re probably consuming and using digital products all day long, whether or not you realize it. Here are some common ones on the market today:

• E-books, images, movies, and videos, whether buying a copy from Shopify or using a service like Netflix. In tax language, these products are in a category usually called, “Audio, visual, or audio-visual products.”
• Downloadable and streaming music, whether buying an MP3 or using a service like SoundCloud or Spotify. Of course, these products also fall in the audio category.
• Cloud-based software and as-a-Service products, such as Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS).
• Websites, site hosting services, and internet service providers.
• Online ads and affiliate marketing. Income from these services can be considered taxable under digital tax policies.

Some US states can have more specific definitions or exceptions. In Denver, according to House Bill 21-1312, digital goods are considered taxable as tangible personal property under the sales and use tax. This means that sales and purchases of digital products, such as e-books, music, and other downloadable content, are subject to the same tax rules as physical goods. Additionally, charges for related services, such as access to mainframe computers, photocopying, or packing and crating, are also taxable. Retailers must collect sales tax on these items as part of their regular tax obligations.

As for computer software, it is subject to sales tax only under certain conditions. Colorado sales tax applies to a sale of computer software if all of the following conditions are met:

1. It is prepackaged for repeated sale or license;
2. Its use is governed by a tear-open nonnegotiable license agreement; and
3. It is delivered in a physical medium such as a tape, disk, compact disc, or card.

Computer software is not subject to sales tax if it is delivered to the purchaser through any of the following methods:

1. It is provided to the customer through an application service provider;
2. It is delivered to the customer by electronic computer software delivery; or
3. It is transferred to the customer by load and leave computer software delivery.

How does Denver sales tax compare to the rest of Colorado?

Denver’s combined sales tax rate of 9.15% is at the higher end compared to the rest of Colorado, where rates can vary from 2.9 % to 11.2% in some cities and counties due to the addition of local district taxes. This reflects the city’s approach to addressing local issues and funding city services through the sales tax system.

Learn more about sales tax rules state-wide in this business guide to sales tax in Colorado.

What creates sales tax nexus in Denver?

Since Denver is located in Colorado, it follows the same state-level sales tax nexus rules. Forms of Colorado state sales tax nexus include:

• Economic nexus: When a business sells goods worth $100,000 or more within the previous or current tax year. More on that below!
• Physical location: This could be an office or a warehouse holding your inventory.
• Employee location: If you have an employee or any other type of representation based in a particular state or city, your business must register for sales tax there.
• Affiliate nexus: If you rely on in-state businesses to promote and refer your business, and you receive a substantial amount of income through these affiliates, then you have sales tax nexus.
• Trade Shows: You may be liable for collecting and remitting Colorado use tax on orders taken or sales made during Colorado conventions or trade shows, even if only in the state for trade show activity for one day.

Denver economic nexus as a remote seller

If your business is fully located outside of Colorado, then economic nexus is your main concern. Here’s how it works. The economic threshold amount refers to your total sales in the whole state, from sales into Colorado during the current or previous calendar year. This can be a calculation of sales in the last twelve months, or a prediction of sales in the next twelve months — any rolling year-long period, past or future.

Basically, if your annual sales in Colorado remain below $100,000, then you don’t need to worry about sales tax at all. Phew!

But once your sales do surpass $100,000, then you must register for sales tax and comply with all of the Colorado rules around tax rate and collection, invoices, and filing returns.

Who needs a seller’s permit in Denver?

Any business with sales tax nexus, according to the rules above, must apply for a seller’s permit in Colorado right away.

The seller’s permit comes with a sales tax registration number, which establishes you in the Colorado tax system as a legal business. This number tracks your business through the system: the taxes you pay, the tax credits you receive, plus the tax you charge from customers.

How to get a seller’s permit in Denver

So, it turns out you do need to register for tax in Denver. Don’t worry! Just follow these instructions on how to register for sales tax in Colorado and that will cover you across the state.

How to calculate Denver sales tax?

Once you’re registered for taxes, you’re expected to apply sales tax to every taxable sale to a Denver resident. That means 9.15% for most products.

If your customer is a fellow business, and they’ve provided a valid sales tax exemption certificate, then adding and collecting tax isn’t necessary.

How to collect sales tax in Denver

Tax-compliant receipts in Denver

In order to comply with tax laws, you should include the following information on your receipts or invoices to customers in Denver:

• Your business’ name and address
• Your business’ sales tax registration number
• Invoice date
• Invoice sequencing number
• Buyer’s name and address
• Buyer’s sales tax registration number, if they have one.
• sales tax (amount and rate) applied to each item
• Final amount after tax is added

The easiest solution for the sales tax receipt would be to use a sales tax software that automatically generates and sends all invoices (as soon as the sale is complete), and also stores them in the cloud for you.

Quaderno provides automatic tax invoicing for every transaction. The app sends tax-compliant receipts, invoices, and credit notes automatically, on the spot. You can also set up recurring invoicing. In fact, Quaderno helps automate many other parts of tax compliance, from adding the correct tax rate calculations to your sales to providing instant reports for filing returns. Give it a try for free.

How to file and pay sales tax in Denver

Charging and collecting tax is only the first half of staying compliant. The second half is filing returns and paying whatever you might owe to the government.

Frequency for sales tax returns in Colorado:

• Businesses selling $15 or less per month in taxable goods must file annually.
• Businesses selling under $400 per month must file quarterly.
• Businesses selling $600 or more per month must file monthly.
• Wholesale businesses with a sales tax liability of $180 per year or less can file annually.

Colorado sales tax returns are due on the 20th day of month following the reporting period. If the 20th day falls on a weekend or holiday, the due date is the next business day. You can usually file and pay online! Check out more instructions on how to file sales tax in Colorado.