How Much Sales Tax do You Pay in Colorado?
In Colorado, the state sales tax rate is 2.9% as of 2020, and the average combined state and local sales tax rate is 7.44%. Colorado has 67 counties, with average local sales taxes ranging from 0% to 4.75%. Depending on the county in which you reside, and the specific goods or services you purchase, your total sales tax liability will vary.
What is Sales Tax?
Sales tax is a consumption tax imposed by the government on the sale of goods and services. The tax is calculated as a percentage of the sale price of the good or service, and is collected by the seller from the buyer at the time of sale. The seller then remits the tax to the state.
In Colorado, the state sales tax rate is 2.9% as of 2020, and the average combined state and local sales tax rate is 7.44%. Colorado has 67 counties, with average local sales taxes ranging from 0% to 4.75%. Depending on the county in which you reside, and the specific goods or services you purchase, your total sales tax liability will vary.
For example, let’s say you purchase a new television for $500 in Denver County. The state sales tax rate in Denver is 2.9%, so you would owe $14.50 in state sales tax (2.9% x $500). In addition, Denver County imposes a 4.31% local sales tax, so you would owe an additional $21.55 in local taxes (4.31% x $500), for a total of $36.05 in combined state and local taxes on your purchase.
What Goods are Subject to Sales Tax in Colorado?
In general, all tangible personal property and certain services are subject to Colorado sales tax if they are purchased for use or consumption within the state. Tangible personal property includes items such as furniture, clothing, books, vehicles, and jewelry. Services subject to Colorado sales tax include repairs, installation labor, telecommunications services, and data processing services. Some examples of items that are not subject to Colorado sales tax include groceries, prescription drugs, and most medical devices.
How Does Sales Tax Work for Online Purchases?
If you make a purchase from an out-of-state retailer online or through mail order catalogs, you may owe use tax on those purchases if they are not subject to Colorado sales tax . Use tax is imposed at the same rate as Colorado’s sales tax rate (2.9%), and is due on any taxable purchases that were not subject to sales tax at time of purchase . For example, if you make a $100 purchase from an online retailer based in another state where no sales tax was charged on your purchase , you would owe $2 .90 in use tax to Colorado . You can report and pay use tax directly to the Department of Revenue , or many retailers will voluntarily collect use tax on behalf of their customers and remit it to the Department .
Colorado’s statewide sales tax rate is 2 .9 % , but when combined with local taxes , it can be as high as 7 .44 % depending on what county you live in . Most tangible personal property and services are subject to Colorado’s sales , with some notable exceptions like groceries , prescription drugs , and medical devices . If you make a purchase from an out-of-state retailer without paying any , you may still owe use at 2 .9 % . Whether purchasing goods or online or in person , it’s important to be aware of Colorado’s so that you can budget accordingly .