Guide to Sales Tax in Colorado in 2026

So, you need to know about sales tax in The Centennial State. Look no further!

Whether you’ve fully set up shop in Colorado, or simply ship there once in a while, it’s important you know whether your business is liable to their sales taxes. Retailers are generally required to register for a Colorado sales tax license if they have a physical location in the state or reach $100,000 in annual retail sales into Colorado. Once you're registered, you'll need to collect the state's 2.9% rate plus any local taxes based on your buyer's delivery address.

Because Colorado uses a destination-based system with varying rates across different cities and special districts, we provide the Colorado Sales Tax Calculator below to help you instantly find the exact combined rate for any specific location. This guide will tell you everything you need to know, plus direct you to the right places for handling any sales tax responsibility you may have.

What’s taxable in Colorado?

Below is an overview of products that are generally taxable in Colorado. Some local cities or districts might have their own rules or exceptions, however. For example, check out the Denver sales tax guide for the specific rules in the Colorado capital city.

Colorado sales tax: Common taxable vs. exempt items

Category	Generally taxable	Generally exempt
Tangible goods	Clothing, electronics, furniture, appliances	Most groceries, prescription drugs, medical equipment
Digital products	Downloaded software, digital books, online courses (in many cases)	Certain digital subscriptions
Food & beverages	Candy, soda, prepared food	Unprepared food for home consumption
Services	Short-term accommodations, some labor services	Most professional services (legal, accounting, consulting)
Shipping & handling	Shipping for taxable items	Shipping for exempt items

Note: Taxability can vary by city or special district. Always confirm with the Colorado Department of Revenue.

Tangible products

Tangible products, as you might guess, are physical items. Colorado taxes most tangible products, but there can be exemptions!

Digital products

Digital products are goods that are delivered or accessed electronically, usually through the internet. Under Colorado law, digital products are generally taxable because they fall under the definition of tangible personal property, even when delivered or accessed electronically.

Taxable digital products include:

• Digital audio works (music, sound recordings)
• Digital audiovisual works (movies, videos)
• Digital books (eBooks)
• Other digital publications such as magazines, newspapers, reports
• Digital photographs and similar content
• Streaming and subscription services
• Software and exceptions: Some types of computer software and cloud-based services may be treated differently under Colorado law, depending on how they are delivered and used; consult the Colorado DOR’s sales and use tax guidance on computer software.

To be absolutely clear about which products are subject to sales tax, and which are exempt, visit the Colorado Department of Revenue.

Do you have nexus in Colorado?

The word “nexus” refers to a commercial connection in the state. Nexus determines the following questions for a state tax agency: Do you do business here, what kind, and how much? And when you do have nexus, that means you’re obligated to collect tax on your sales there.

So the first question for you to answer is whether you have nexus in Colorado.

You probably have nexus in Colorado if any of the following points describe your business:

• A physical presence in Colorado: a store, an office, a warehouse or distribution center, storage space, you, an employee, a representative, etc.
• A significant amount of sales in Colorado within twelve months.¹

¹ This is called an economic nexus, a sales tax nexus determined by economic activity, i.e. – the amount of sales you make in a particular state. Any kind of economic activity could trigger the nexus, once your total sales reach a certain threshold amount.

The threshold in Colorado is $100,000 in annual sales. To learn more about how this works, check out the Ultimate Guide to US Economic Nexus.

How to collect sales tax in Colorado

Now it’s time to tackle the intricate stuff! Tax rates can vary based on the location of your business and the location of your customer, plus the levels of sales tax that apply in those specific locations.

The state-wide sales tax in Colorado is 2.9%.

There are additional levels of sales tax at local jurisdictions, too.

Check out Quaderno’s Sales Tax Calculator to see your product’s tax rate, amount, and final price in Colorado.

Colorado has a destination-based sales tax system,² so you have to pay attention to the varying tax rates across the state. Charge the tax rate of the buyer’s address, as that’s the destination of your product or service.

² Important to note for remote sellers: While this is generally true for Colorado, some states have peculiar rules about tax rates for remote sellers. Contact the state’s Department of Revenue to be sure.

Sales tax on shipping charges in Colorado

Colorado does apply sales tax to shipping costs. The rule of thumb is that if what you’re selling is subject to tax, then the shipping charges are also subject to tax. (And vice versa is true: If the item being shipped is not subject to sales tax, neither are the shipping charges.)

If you happen to be shipping products that are both taxable and nontaxable, then shipping charges for the entire shipment are subject to tax.

Note on deliveries: If you ship taxable goods into Colorado, you may also be required to collect a flat $0.28 Retail Delivery Fee (RDF) per order. This is filed alongside your sales tax return. Exemption: This fee does not apply to businesses with less than $500,000 in annual Colorado sales.

Colorado sales tax compliance checklist

Step	What to do	Key notes
1. Determine nexus	Confirm whether your business has physical or economic nexus in Colorado.	Economic nexus threshold: $100,000 in annual sales.
2. Register for a permit	Apply for a Colorado sales tax license with the Department of Revenue.	You cannot legally collect tax before registration.
3. Identify taxable items	Determine which of your products or services are taxable.	Includes digital goods and shipping for taxable items.
4. Calculate the correct rate	Apply state, local, and special district rates.	Colorado uses destination-based sourcing.
5. Collect sales tax	Charge the correct rate at checkout and document exemptions.	Maintain exemption certificates if applicable.
6. File sales tax returns	Submit returns monthly, quarterly, or annually as assigned.	Generally due on the 20th of the following month.
7. Remit payment	Pay the collected tax by the filing deadline.	Zero-tax returns are still required.

How to register for sales tax in Colorado

Okay, so you have nexus! Now what?

The next crucial step in complying with Colorado sales tax is to register for a sales tax permit. It’s actually illegal to collect tax without a permit. So to get all your ducks in a row, start with tax registration first.

Learn more in our Colorado State Registration and Filing Guide.

When to file taxes in Colorado

Your filing frequency (monthly, quarterly, or annually) depends on the amount of sales tax you collect. Returns are typically due on the 20th day of the month following the reporting period. If the due date falls on a weekend or holiday, it’s due the next business day. Check your specific deadlines in our Colorado State Registration and Filing Guide.

How to file taxes in Colorado

When tax time rolls around in Colorado, you must:

1. Calculate sales tax collected and owed
2. File a sales tax return
3. Make a payment

Even if no sales were made, a zero-tax filing is still required. Learn more in our Colorado State Registration and Filing Guide.

Other Colorado tax info

Penalties

If you miss a filing or payment deadline, certain penalties can apply. Such a pain! Check the state’s website for up-to-date penalty fees.