If you sell products in Colorado, you may need to collect sales tax. Colorado has one of the nation’s most complex tax systems because the state, counties, and many home-rule cities administer their own taxes. If you have a physical presence or meet the state’s economic nexus threshold, you generally must register, collect, and remit sales tax. This guide explains the rules for 2026.
Determining Your Colorado Sales Tax Nexus
You must collect Colorado sales tax if your business has physical nexus or economic nexus.
Physical nexus: You have a store, office, warehouse, employees, inventory (including Amazon FBA), or regularly attend trade shows in Colorado.
Economic nexus: Your business has $100,000 or more in annual Colorado sales, even without a physical presence.
If you meet either requirement, register for a Colorado sales tax license before making taxable sales.
Colorado Sales Tax at a Glance (2026)
| Colorado Sales Tax | Details |
| State sales tax rate | 2.9% |
| Economic nexus | $100,000 in annual Colorado sales |
| Home-rule cities | About 70 |
| Filing portal | MyBizColorado / Revenue Online |
| Retail Delivery Fee | $0.29 per delivery (2026) |
| Marketplace sales | Marketplace facilitators generally collect tax |
Economic Nexus Thresholds for Remote Sellers
Since 2019, Colorado has enforced economic nexus rules for remote sellers. If your business generates $100,000 or more in gross sales into Colorado in the current or prior calendar year, you must collect and remit Colorado sales tax, even without any physical presence in the state.
This $100,000 threshold applies to total gross revenue from Colorado customers, not just taxable sales. So if you sell a mix of taxable and exempt products, you still count everything toward that number. Many e-commerce sellers hit this threshold without realizing it, especially those selling through multiple channels. Set a calendar reminder to check your Colorado revenue quarterly so you don’t accidentally blow past the limit and discover the obligation months late.
Understanding Colorado’s Unique Home-Rule Cities
Colorado has about 70 home-rule cities that administer their own sales taxes.
Some cities allow you to file through the Sales and Use Tax System (SUTS), while others require separate registration and filing.
Before selling into a home-rule city, verify whether you must register directly with that municipality.
A contractor providing services in Bethel needs to check whether Bethel taxes services or only tangible goods. Many Alaska localities only tax physical products, but some extend their tax to specific services. There’s no uniform rule, which means checking each locality’s ordinance individually.
A seasonal tourism business operating in Skagway during cruise season must register with the municipality, collect the local tax during operating months, and file accordingly, even if the business is only active for four months of the year.
State-Collected vs. Self-Collected Jurisdictions
Colorado recognized this was a nightmare for businesses and created the Sales and Use Tax System, known as SUTS. This online portal allows businesses to file and remit sales tax to participating home-rule cities through a single interface rather than dealing with each city individually.
As of 2026, over 80 jurisdictions participate in SUTS, though not every home-rule city has opted in. Denver, for instance, joined SUTS in recent years, which was a significant relief for sellers. You can check the current list of participating jurisdictions on the Colorado Department of Revenue’s SUTS page. If a city you sell into isn’t on the list, you still need to register and file with that city directly. SUTS doesn’t eliminate the obligation: it just makes the mechanics less painful for participating cities.
Taxability of Products and Services
Some products are exempt or taxed differently, including:
- Most groceries
- Prescription medications
- Certain medical devices
- Some agricultural equipment
Businesses making tax-exempt sales should keep resale certificates on file in case of an audit.
Exemptions and Resale Certificates
Several categories of sales are exempt from Colorado sales tax. Groceries (unprepared food) are exempt at the state level, though some local jurisdictions still tax them. Prescription drugs, certain medical devices, and agricultural equipment also qualify for exemptions.
If you sell to other businesses that intend to resell your products, they should provide you with a Colorado resale certificate (Form DR 0563). Keep these on file: the Department of Revenue can audit you and demand proof that exempt sales were legitimately exempt. A missing resale certificate means you’re on the hook for the uncollected tax, plus interest and penalties.
- Collect a completed DR 0563 from the buyer before or at the time of sale.
- Verify the buyer’s Colorado sales tax license number.
- Store the certificate for at least three years (the standard audit lookback period).
The Colorado Retail Delivery Fee
Colorado charges a Retail Delivery Fee on deliveries containing at least one taxable item. As of 2026, the fee is $0.29 per delivery and must appear as a separate line item on the customer’s receipt.
Most e-commerce platforms support this fee, but you’ll need to confirm it is properly configured.
Applying for a Colorado Sales Tax License
You can apply for a Colorado sales tax license through the Colorado Department of Revenue’s MyBizColorado portal or through Revenue Online. The process is straightforward:
- Create an account on Revenue Online (colorado.gov/revenueonline).
- Complete the sales tax license application (CR 0100).
- Pay the $16 state license fee (plus $4 for each additional location, if applicable).
- Receive your license, typically within 7-10 business days.
- Remember, this state license only covers state-collected jurisdictions. For self-collected home-rule cities, you’ll need to register separately through each city’s website or through the SUTS portal if the city participates.
Filing Frequency and Due Dates
Colorado assigns your filing frequency based on your expected tax liability. If you expect to collect less than $300 in state sales tax per month, you’ll likely file quarterly. Higher volumes may require monthly filing. Very small sellers might qualify for annual filing.
Returns are due on the 20th of the month following the reporting period. So a monthly return for January is due February 20th. Late filings trigger a penalty of 10% of the tax due, plus 0.5% interest per month. Colorado does offer a vendor’s fee (a small discount for timely filing), which was 4% of the first $1,000 collected as of recent years: a modest incentive, but worth capturing consistently.
Marketplace Facilitator Laws for E-commerce
Marketplace facilitators such as Amazon, Etsy, and eBay generally collect Colorado sales tax on marketplace sales. If you also sell through your own website, you’re responsible for collecting tax on those direct sales.
FAQs
Who needs to collect Colorado sales tax?
Businesses with a physical presence in Colorado or $100,000 or more in annual Colorado sales generally must collect and remit sales tax.
What are Colorado home-rule cities?
Home-rule cities administer their own local sales taxes and may require separate registration and filing in addition to your state sales tax license.
What is the Colorado Retail Delivery Fee?
Colorado charges a Retail Delivery Fee on deliveries that include at least one taxable item. The fee is collected separately from sales tax.
Do Amazon and Etsy collect Colorado sales tax?
Yes, marketplace facilitators such as Amazon, Etsy, and eBay generally collect and remit Colorado sales tax on marketplace sales.
What happens if I don’t collect Colorado sales tax?
You may owe back taxes, penalties, interest, and any unpaid Retail Delivery Fees, even if you didn’t collect them from your customers.
Final Thoughts
Colorado’s sales tax system is more complex than most states because of its home-rule cities, destination-based tax rates, and retail delivery fee. Start by determining whether you have nexus, register with the appropriate authorities, and collect the correct tax rate on every sale. Keeping accurate records and filing on time will help you avoid penalties and costly audits.
Need help with Colorado sales tax permits, stay compliant with Colorado filing requirements, and manage ongoing sales tax obligations. Contact us today for expert assistance.
