Colorado Sales Tax: State Rate, Use Tax, Nexus, & More

Physical Nexus

Your business has physical nexus if it has any of the following items within the state of Colorado:

Physical offices or storefronts
Employees reside in the state
Affiliates who refer business either directly or indirectly to the retailer of tangible products
Tradeshow presence

Here is a more extensive list of what the state of Colorado considers instances of creating sales tax nexus.

Colorado Tax Help: What Has to Be Taxed?

Typically, services are not taxable, however, services such as repairing or producing a product will create sales tax liability. Physical products are taxable in-state with a few exceptions. Taxability can change state to state and often depends on how your product/services are defined.

Determine whether software and SaaS are subject to taxation here.

Like much of sales tax, this can often be difficult to manage alone. Reach out if you need help understanding the taxability of your products/services.

What Is the Sales Tax in Colorado?

As a destination-based sales tax state, Colorado requires sellers in-state to charge the rate at which the item is being delivered in. This may include state, county, city, and district tax rates. Sellers based outside of Colorado selling into the state are required to charge sales tax based on the buyer's location.

Colorado's state sales tax rate is 2.9%. Depending on local municipalities, the total tax rate can be as high as 11.2%.

When Is Sales Tax Due in Colorado?

Sales tax returns are dependent upon the state's due dates and the vendor's filing frequency. If the seller exceeds the economic threshold, they are liable to file on a monthly basis. If the seller does not exceed the threshold, then returns could be due quarterly or annually.

In Colorado, sales tax returns are due by the 20th of the month following the reporting period. The state requires an extra business day to process payments and as a result, the "payment" is due a day earlier than the filing date.

How to File Taxes in Colorado

Colorado has three options to file your sales tax returns:

File by mail
File online
Outsource the filing process to a third-party like TaxConnex

TaxConnex offers expert tax services that take the stress out of compliance in Colorado. Learn how we take care of scheduling, management, return filing, correspondence, remittance, and more for you here.