Sales tax imposition and scope
Colorado imposes state sales tax on retail sales of tangible personal property and on four specifically enumerated categories of services. The four enumerated taxable services are: rooms and accommodations, gas and electric service, steam, and telephone and telegraph service. Wholesale sales are exempt from sales tax.
Colorado does not impose state sales tax on services generally; the purchase of most personal services—such as professional services, repair services, data processing services, and other service transactions—is not subject to Colorado sales tax unless the service falls within one of the four enumerated categories above. Prepared food and drink sold by restaurants, bars, and similar establishments is also subject to Colorado sales tax, though it is classified as tangible personal property rather than as a service.
The tax is imposed under C.R.S. § 39-26-104. The statute levies sales tax "upon the sale or purchase of any article of tangible personal property at retail" and on the specifically enumerated services. Regulation 26-102.9 (1 CCR 201-4) clarifies that "'Retail sale' includes all sales of tangible personal property and the sales of those services specifically enumerated in the Act as rooms and accommodations, gas and electric service, steam, and telephone and telegraph service."
Home-rule city taxes. Many Colorado home-rule cities impose local sales taxes with different bases and may tax services not subject to state sales tax. The four-category enumeration applies only to state sales tax; practitioners advising multistate sellers should confirm the taxable base for each self-collected home-rule jurisdiction separately.
Source: C.R.S. § 39-26-104 | Regulation 26-102.9, 1 CCR 201-4
State sales tax rate
Colorado imposes a state sales tax at the rate of 2.9 percent on all retail sales of tangible personal property and specified services. This rate has been in effect since January 1, 2001, when it was reduced from the previous 3 percent rate. The tax is imposed under C.R.S. § 39-26-106.
The 2.9 percent state rate applies uniformly across Colorado. However, local jurisdictions (cities, counties, and special districts) may impose additional sales taxes on top of the state rate, resulting in combined rates that vary significantly by location. The state rate applies only to transactions subject to Colorado sales tax; exempt sales are not subject to the 2.9 percent state levy.
Source: Colorado Sales Tax Guide, Colorado Department of Revenue
Economic nexus threshold for remote sellers
Colorado requires remote sellers without physical presence to collect sales tax if they exceed $100,000 in retail sales into Colorado during the current or previous calendar year. The threshold is sales-based only; Colorado does not impose a transaction-count requirement. Sales are measured on a calendar-year basis.
Sales included in the threshold. The threshold applies to all retail sales, including both taxable and exempt sales. However, the calculation differs depending on whether the seller is a marketplace facilitator or a marketplace seller.
Marketplace facilitators must include all sales they make directly, plus all sales made by marketplace sellers in and through their marketplace, when determining whether the $100,000 threshold is met. This aggregation rule means a marketplace facilitator's economic-nexus calculation includes sales it facilitates on behalf of third-party sellers.
Marketplace sellers must exclude any sales made in or through a marketplace facilitator's marketplace when calculating whether they meet the $100,000 threshold. This exclusion is critical: a seller who makes $80,000 in direct sales and $150,000 in sales through Amazon's marketplace counts only the $80,000 toward the threshold and does not have economic nexus. The exclusion ensures that marketplace sellers are not subject to duplicative collection obligations for sales already subject to tax collection by the marketplace facilitator.
Multichannel sellers — those who sell both through a marketplace and directly — must apply both rules: they include their direct sales but exclude their marketplace-facilitated sales when determining whether the threshold is met. If a multichannel seller exceeds the threshold based on direct sales alone, it must collect tax on those direct sales; the marketplace facilitator remains responsible for tax on marketplace-facilitated sales.
The aggregation and exclusion rules took effect October 1, 2019, concurrent with Colorado's marketplace facilitator collection duty.
Source: C.R.S. § 39-26-102(3)(c)
Use tax imposition
Colorado imposes use tax at 2.9 percent on the storage, use, or consumption of tangible personal property purchased at retail when sales tax was not collected at the time of purchase. Use tax is due when a taxpayer stores, uses, or consumes taxable property in Colorado without having paid all applicable sales or use taxes at acquisition, most commonly when purchasing from an out-of-state seller who does not collect Colorado sales tax. The use tax rate mirrors the state sales tax rate.
Source: C.R.S. § 39-26-202 | Consumer Use Tax Guide, Colorado Department of Revenue
Marketplace facilitator collection duty
Colorado requires marketplace facilitators to collect and remit state sales tax on taxable sales made through their marketplace, including sales by third-party marketplace sellers, effective October 1, 2019. A marketplace facilitator is a person who (1) contracts with sellers to facilitate sales for consideration, (2) transmits offers or acceptances between buyers and sellers, and (3) collects payment from purchasers and transmits it to sellers. Entities that exclusively provide advertising or product listings without meeting all three prongs are not marketplace facilitators.
Marketplace sellers do not have collection obligations for sales made through a facilitator's marketplace; the facilitator bears all retailer rights and liabilities for those transactions. Multichannel sellers—those who sell both through a marketplace and directly—must still collect tax on their direct sales.
Source: C.R.S. § 39-26-102(5.9), (6), (6.2) | Marketplace Facilitators, Colorado Department of Revenue
Retail delivery fee
Colorado imposes a retail delivery fee on each retail sale of tangible personal property subject to state sales or use tax when the sale includes delivery by motor vehicle to a location in Colorado. The fee is imposed per retail sale, not per item or shipment; a single retail sale counts as one retail delivery regardless of how many shipments are necessary to deliver the purchased items. The retailer or marketplace facilitator that collects the sales or use tax on the sale is responsible for collecting and remitting the retail delivery fee.
Fee amount and inflation adjustment. The retail delivery fee is $0.28 per retail delivery for deliveries made from July 1, 2025, through June 30, 2026. Effective July 1, 2026, the total retail delivery fee increases to $0.31 per retail delivery, reflecting the most recent annual inflation adjustment by the Department of Revenue. The Department is required to adjust the fee annually for inflation, with adjustments effective each July 1, and must publish the new rate by April 15 of the calendar year in which the state fiscal year begins. The fee may only be increased if cumulative inflation from the last adjustment, when applied to the combined total of the retail delivery fee and all enterprise retail delivery fees and rounded to the nearest whole cent, results in an increase of at least one whole cent. The cumulative inflation applied is capped at the lesser of actual cumulative inflation or five percent.
Covered deliveries. A delivery is subject to the fee if it involves delivery by motor vehicle at any point between order acceptance and final delivery to the purchaser's specified location. "Motor vehicle" is defined as any self-propelled vehicle designed primarily for travel on public highways and generally and commonly used to transport people and property, including low-speed electric vehicles and autocycles. The fee applies whether the motor vehicle is operated by the retailer or by a third party, such as a shipping company or the U.S. Postal Service. Over-the-counter sales (where the customer takes possession at the point of sale with no post-order delivery) are not subject to the fee.
Qualified-business exemption. Retail deliveries by a qualified business are exempt from the retail delivery fee. A qualified business is a business whose retail sales of tangible personal property, commodities, or services in Colorado in the previous calendar year totaled $500,000 or less. A business with no Colorado retail sales in the previous calendar year is also a qualified business; for such a business, the exemption applies until the first day of the filing period that begins at least 90 days after its cumulative Colorado retail sales in the current year exceed $500,000. The exemption applies retroactively to July 1, 2022, when the fee was first imposed. However, a qualified business that collected the fee from customers must still remit the collected amounts to the Department of Revenue.
Collection and retailer election. The retailer must either (1) collect the fee from the purchaser, separately state it on the invoice or receipt as "Retail Delivery Fee" distinct from the sales price and other charges, and remit the collected amount, or (2) pay the fee on behalf of the purchaser without separately collecting or itemizing it. If the retailer elects to pay the fee on behalf of the purchaser, the purchaser has no liability for the fee and is not entitled to a refund if the fee was erroneously imposed. Retailers file the fee on form DR 1786 on the same schedule as their sales tax return—generally monthly, due on or before the 20th of the month following the reporting period.
Relationship to sales tax nexus. A retailer who is not "doing business in this state" under C.R.S. § 39-26-102(3) (the sales tax nexus standard) is not obligated to collect and remit the retail delivery fee. A retailer's obligation to collect the retail delivery fee begins on the same date as the retailer's obligation to collect state sales tax. However, a seller required to collect sales tax is not necessarily required to collect the retail delivery fee; the fee applies only to deliveries by motor vehicle, and certain sales (e.g., lump-sum contractor transactions, sales of exempt tangible personal property, deliveries made entirely without motor-vehicle involvement) are not subject to the fee even if sales tax applies.
Enterprise fees. In addition to the state retail delivery fee, the statute simultaneously imposes several enterprise retail delivery fees: community access, clean fleet, bridge and tunnel, clean transit, and air pollution mitigation retail delivery fees. These enterprise fees are administered together with the state retail delivery fee; the total fee amount displayed to the purchaser is the sum of all six fees, shown as a single line item labeled "Retail Delivery Fee." The figures referenced above reflect the combined fee amount.
The retail delivery fee and all enterprise fees took effect on July 1, 2022, pursuant to Senate Bill 21-260, enacted in 2021. Senate Bill 23-143, enacted in 2023, added the qualified-business exemption retroactive to July 1, 2022, and authorized retailers to elect to pay the fee on behalf of purchasers. The most recent fee increase to $0.31 per retail delivery takes effect July 1, 2026, per the Department of Revenue rate notice published April 2026.
Source: C.R.S. § 43-4-218 | Retail Delivery Fee, Colorado Department of Revenue | Retail Delivery Fee Rate Notice, Colorado Department of Revenue | DR 1786, Retail Delivery Fee Return
Filing frequency and due dates
For Colorado sales tax, filing frequency is based on a retailer's average or estimated monthly state sales tax remittance. Effective for periods starting January 1, 2025, House Bill 24-1041 raises the threshold for quarterly filing from $300 to $600 per month. The updated filing frequency tiers are:
- Annual filing: Allowed only if average monthly state sales tax collection is $15 or less.
- Quarterly filing: Allowed if monthly collections are less than $600.
- Monthly filing: Required if monthly collections are $600 or more.
These thresholds were changed by HB24-1041, increasing the quarterly threshold from $300 to $600 beginning with the 2025 tax year. Prior thresholds were $300 (monthly vs. quarterly) and $15 (annual). The Department of Revenue reviews filing frequencies annually and reassigns retailers upward (but not downward) if liability crosses a tier—retailers whose payments decline must formally request a lower frequency.
Sales tax returns and payments are due on the 20th day of the month following the close of the tax period. If the 20th falls on a weekend or legal holiday, the due date moves to the next business day. For example, the January–March quarterly period is due April 20. A return must be filed for every assigned filing period, even if no sales occurred.
Electronic funds transfer (EFT): Retailers remitting more than $75,000 per year in state sales tax must remit via EFT on the same schedule as their filings.
Home-rule cities: Self-collecting home-rule cities may have different filing schedules; confirmation with each city is necessary.
Note: As of June 2026, Rule 39-26-109 (1 CCR 201-4) has not yet been amended to reflect the $600 statutory threshold, but the statute (as amended by HB24-1041) controls and the Department has updated its published guidance to the new threshold.
Source: HB 24-1041, Colorado General Assembly | Colorado Sales Tax Filing Information, Colorado Department of Revenue | 1 CCR 201-4, Rule 39-26-109
Taxability of digital goods, electronically delivered software, and home-rule city distinctions
Material change effective January 1, 2027: Colorado expands sales and use tax to electronically delivered software
A statutory amendment signed into law on June 4, 2026 (House Bill 26-1223), materially changes the taxability of digital goods and software for Colorado sales and use tax, effective January 1, 2027.
Digital goods (music, video, e-books): Colorado state sales tax continues to apply to digital goods such as music, video, and e-books that are delivered or accessed electronically. These products remain classified as tangible personal property under C.R.S. § 39-26-102 and are taxable regardless of delivery method (download, streaming, etc.). The Department of Revenue’s Sales Tax Guide confirms this treatment remains in force.
Prewritten computer software (electronically delivered/downloaded/RaaS/SaaS): Change effective Jan. 1, 2027: Prior to 2027, Colorado exempted prewritten (canned) computer software delivered solely via electronic means (i.e., not via tangible medium). This exemption also extended to software accessed remotely (software-as-a-service, or SaaS) or delivered through downloads, as recognized in prior DOR guidance (e.g., FYI Sales 89, PLR-16-007).
Effective for sales made on or after January 1, 2027, House Bill 26-1223 expands the sales and use tax base to include all prewritten computer software, regardless of delivery method (tangible media, electronic download, or remote access). This means prewritten software, whether purchased as a download, accessed remotely (SaaS), or installed via a physical device, will be taxable at the state level. A narrow exemption remains for custom software or software provided under a negotiated license (as defined in statute), but the previous broad exemption for electronically delivered software will no longer apply.
True Object Test / Mixed Transactions: DOR continues to use the “true object” test to analyze mixed transactions. Bundled products or services may be taxable or exempt depending on whether the dominant element delivered is a taxable digital good/software or a service.
Home-rule municipalities: Home-rule cities in Colorado are not required to follow state tax base changes. Some tax digital goods and software differently than the state. Retailers should confirm local taxability of digital goods, SaaS, or downloads with each self-collected home-rule city; state guidance does not control in these jurisdictions.
Authority and sources:
- House Bill 26-1223 (enacted June 4, 2026; effective Jan. 1, 2027)
- C.R.S. § 39-26-102 (current law; tax base definitions)
- Colorado Department of Revenue Sales Tax Guide (confirms current baseline)
Source: Colorado House Bill 26-1223 (2026) Source: C.R.S. § 39-26-102 Source: Colorado Sales Tax Guide, Colorado Department of Revenue
Not yet human confirmed. This section was updated to reflect the material legislative change enacted June 4, 2026, effective for sales on or after January 1, 2027. Prior guidance remains applicable to transactions before that date.
Economic nexus thresholds for sales tax collection in self-collected Colorado home-rule cities
Direct answer: Many self-collected home-rule municipalities in Colorado have adopted their own local economic nexus thresholds for remote sellers, most often set at $100,000 in annual gross sales delivered into that specific city. These thresholds apply per city, not aggregated statewide, and are independent of Colorado’s $100,000 threshold for state-collected sales tax.
Why: Colo. Const. art. XX, § 6 authorizes home-rule cities to administer their own tax ordinances. While there is no single primary authority or DOR-published list that definitively enumerates which cities have adopted economic nexus ordinances or details the effective date for each, Denver provides a public policy statement and the Department of Revenue’s DR 1002 publication lists which cities are self-collected. Most cities follow ordinances modeled on the Colorado Municipal League’s $100,000 economic nexus template, applied separately for sales into that city, but confirmation must be done city-by-city.
SUTS system and registration: Self-collected home-rule cities may voluntarily participate in the Sales & Use Tax System (SUTS) portal operated by the Colorado Department of Revenue, allowing unified registration and filing for participating jurisdictions. The DR 1002 publication includes attribution for SUTS participation as reported by each city, though no real-time, authoritative public list of city-by-city nexus thresholds exists. For Denver, details on registration, threshold, and SUTS participation are published by the Department of Finance directly. Remote sellers must check DR 1002 and contact city tax offices for up-to-date practical requirements as these change and may not be codified in state materials.
Major city example:
- Denver: Requires remote sellers with more than $100,000 in sales into Denver in the current or previous calendar year to register, collect, and remit Denver sales tax. Denver participates in SUTS (See DR 1002 and Denver Department of Finance).
- Other cities: Colorado Springs, Aurora, and Fort Collins are listed as self-collected and SUTS participants in DR 1002, but specifics on ordinance language and enforcement require direct city confirmation. No state-published source exists to document their threshold statutes.
Source support: Source: Colo. Const. art. XX, § 6 Source: Colorado Sales/Use Tax Rates (DR 1002), Colorado Department of Revenue Source: Local Government Sales Tax, Colorado Department of Revenue
Not yet human confirmed. No single authoritative source definitively lists every city’s nexus threshold or SUTS status; direct confirmation with each city is required beyond what is documented for Denver.
Retail delivery fee responsibilities for marketplace facilitators and marketplace sellers
Direct answer: When all of a seller’s Colorado retail sales are made through a marketplace facilitator (such as Amazon, DoorDash, or Instacart), the marketplace facilitator—when responsible for collecting Colorado sales or use tax—is also responsible for collecting and remitting the Colorado retail delivery fee (RDF) on those transactions. The marketplace seller does not have any separate obligation for the RDF for transactions in which the marketplace facilitator collects and remits tax. The retail delivery fee liability always follows whoever is liable for sales or use tax collection on a given retail delivery.
Why: C.R.S. § 43-4-218 requires the retail delivery fee to be collected and remitted by “the retailer or marketplace facilitator that collects the sales or use tax on the retail sale.” Under DOR’s published Retail Delivery Fee guidance: “If a marketplace facilitator is responsible for collecting the sales or use tax for a sale, the marketplace facilitator is responsible for collecting and remitting the retail delivery fee for that delivery.” Marketplace sellers have no parallel duty for these transactions.
Hybrid or split-shipment scenarios: When orders are split and fulfilled both through a marketplace facilitator and by the seller directly, the retail delivery fee must be collected and remitted by each party for the deliveries for which they are liable for Colorado sales or use tax. DOR explains: “If a marketplace facilitator is only responsible for collecting sales or use tax on part of an order, the facilitator is only responsible for remitting the retail delivery fee on the portion for which it collects the sales or use tax.” Each party’s RDF liability matches sales tax collection responsibility for the final delivered sales, not the overall transaction.
Other third-party fulfillment: If fulfillment is through a party that is not a marketplace facilitator (as defined in statute) but that is merely a shipping or logistics company, the RDF obligation remains with the retailer who collects the sales or use tax—not the third-party shipper.
Effective date and scope: These rules have been in effect since the RDF's creation (July 1, 2022) and reflect the law as of the 2025–2026 state fiscal year.
Source: C.R.S. § 43-4-218 Source: Retail Delivery Fee, Colorado Department of Revenue
Caution / review status: Not yet human confirmed. As of June 2026, DOR guidance is categorical regarding sales given to marketplace facilitators, but provides limited examples concerning hybrid order fulfillment (split shipments); facts outside clear DOR examples may require fact-specific review.
Local sales and use tax rates: calculation, publication, and lookup tools
Colorado sales and use tax is imposed not only at the state level (2.9%) but may also include a wide range of local add-on rates, including city, county, and special district taxes. The structure and administration of these local taxes is complex because some cities are “state-collected” (local sales taxes administered by the Colorado Department of Revenue), while many home-rule cities are “self-collected” and administer their own local taxes independently of the state system.
State-administered (state-collected) local taxes: Most counties, many cities, and all special districts that impose sales and use taxes have chosen to let the Colorado Department of Revenue collect and administer their local taxes. For these jurisdictions, the DOR publishes official rates in the DR 1002 publication, which is updated twice annually and is effective each January 1 and July 1. The DR 1002 lists every state-collected local jurisdiction with current sales and use tax rates, and includes a matrix showing whether each local jurisdiction’s tax is collected by the state, is home-rule/self-collected, and whether the tax applies to specific goods and services categories (such as food for home consumption or machinery and tools).
Material change – lodging tax rates have moved to DR 1003 (effective August 1, 2025): Starting August 2025, local lodging-related taxes—including the Local Marketing District Tax (LMD), Visitor Benefit Tax (VBT), and County Lodging District Tax (CLD)—are no longer included in DR 1002. These rates and jurisdictions have been reassigned to a separate DOR publication, DR 1003, which is now the primary source for all state-collected lodging tax rates and boundaries. Practitioners seeking to calculate total applicable lodging tax at a location must consult both DR 1002 for general local sales/use taxes and DR 1003 for lodging-specific district taxes.
Self-collected home-rule cities: Roughly 70 Colorado municipalities (as of mid-2026), including Denver, Boulder, and Aspen, are home-rule self-collectors. They set their own tax bases, exemptions, and rates, and collect sales/use taxes directly. Self-collected home-rule city rates, as well as contact information, are also listed in DR 1002, but the DOR does not administer or guarantee their accuracy. Practitioners must confirm home-rule rates and rules directly with the relevant city tax administrator. Some self-collected cities may not update their rates semi-annually to align with the state schedule.
Rate Lookup Tools: To find the correct tax rate for a specific address—crucial for online/remote and multistate sellers—Colorado provides multiple official tools:
- The GIS (Geographic Information System) Sales Tax Rate Locator (“Revenue Online”), which lets users search by street address for the combined rate applicable at that location, factoring in all state, local, and special district components except newly separated lodging district taxes, which may require an additional lookup in DR 1003.
- The sales tax rate spreadsheets, which combine data from DR 1002 and (for state-collected jurisdictions) DR 0800 to enable quick lookup and automated import into point-of-sale/accounting systems.
Rates and boundary data in these tools are updated to align with the biannual effective dates (January 1 and July 1) reflected in DR 1002 and now DR 1003. For definitive research—especially near city boundaries or for self-collected home-rule cities—always start with DR 1002, confirm whether local taxes are state- or self-collected, consult DR 1003 for lodging taxes, and support the combined rate calculation with the official GIS/Revenue Online system.
Source: DR 1002 – Colorado Sales/Use Tax Rates, Colorado Department of Revenue Source: DR 1003 – Colorado Lodging Tax Rates, Colorado Department of Revenue Source: How to Look Up Sales & Use Tax Rates, Colorado Department of Revenue Source: Local Government Sales Tax, Colorado Department of Revenue
Aggregation of sales by related or commonly controlled entities for economic nexus and retail delivery fee thresholds
Direct answer: As of June 2026, Colorado does not require aggregation of retail sales by related or commonly controlled entities (other than marketplace facilitator rules) for purposes of determining whether the economic nexus threshold for sales tax or the retail delivery fee threshold is met. Each retailer's sales are evaluated independently for both thresholds.
Why: The economic nexus threshold was established by HB19-1240 and is codified at C.R.S. § 39-26-102(3)(c). The statute imposes sales tax collection responsibility on a "retailer" that has more than $100,000 in retail sales delivered into Colorado in the current or previous calendar year. The term "retailer" is defined in C.R.S. § 39-26-102(8) and does not include related or commonly controlled entities under a single economic nexus test, except in the case of marketplace facilitators, who must aggregate their own sales with sales they facilitate. No statutory language, regulation, or Department of Revenue guidance currently extends aggregation requirements to commonly controlled subsidiaries, parent/subsidiary groups, or affiliated entities outside of marketplace rules.
For the retail delivery fee (C.R.S. § 43-4-218), the qualified business exemption applies to each "retailer" based on that retailer's sales alone. Statutory language and Department of Revenue guidance are silent on aggregation of sales across related but separately registered entities.
By contrast, several other states (e.g., Illinois, New York) have express aggregation rules for certain seller types, but Colorado law as of June 2026 does not. Unless and until the legislature amends the statute or promulgates new regulations, aggregation across commonly controlled or affiliated businesses does not apply for Colorado's economic nexus or retail delivery fee purposes.
Source support: Source: C.R.S. § 39-26-102(3)(c), (8) Source: C.R.S. § 43-4-218
Caution / review status: Not yet human confirmed. Practitioners should monitor for future regulatory developments or explicit DOR guidance, as statutory silence occasionally leaves room for case-by-case interpretation or new rules in legislation or regulation.
Tax treatment of mandatory gratuity, cover charges, and service fees for bars and restaurants—State vs. home-rule distinction
Mandatory gratuities, service fees, and cover charges imposed by bars and restaurants in Colorado are included or excluded from the state sales tax base based on specific criteria set by statute and Department of Revenue (DOR) guidance.
State treatment — statutory and regulatory test Under C.R.S. § 39-26-102(7), "sales price" means the total amount received in money or otherwise for tangible personal property or taxable services, including service charges, but excluding “gratuities paid as a result of a freewill act of the purchaser.” The Colorado Sales Tax Guide and GIL-23-001 clarify:
- A service charge (including an automatic or mandatory gratuity, or a cover charge that forms part of the food/drink price) is taxable if it is added by the establishment and is not distributed to employees as tips.
- An amount separately stated as a gratuity or tip, and which is actually distributed in full to the employees who provide the service, is not subject to sales tax—even if it is mandatory (e.g., an automatic 18% tip on large parties), as long as it is not retained by the business.
- The key distinction is between charges that compensate the business (or are retained) and those that pass fully to staff—only the latter are excluded. The DOR states: “A mandatory gratuity or service charge is included in the sales price if not distributed in its entirety to the employee(s) for whom it is purportedly collected.” (Sales Tax Guide; GIL-23-001)
- Voluntary (non-mandatory) tips and gratuities, if separately stated and paid over to staff, are always excluded from taxable sales price.
Cover charges: If a cover charge is for admission or entertainment (not for food or drink), it is not subject to sales tax. However, if a cover charge is included in the total price for food or drink, it is taxable. The DOR’s industry publication for dining states: “A cover charge...is subject to sales tax when it is in exchange for a meal or drink.”
Home-rule municipal taxes: Self-collected (home-rule) cities in Colorado are not bound to the state DOR’s definition of sales price and may tax mandatory gratuities, service charges, or cover charges more broadly—even if distributed to employees. The DOR specifically advises: “Home-rule jurisdictions may define sales subject to tax differently. Retailers should check with the city regarding rules for mandatory service charges, gratuities, and cover charges.” There is no single uniform rule, so restaurants operating in multiple jurisdictions must confirm with each home-rule city’s tax authority whether such charges are taxable.
Source: C.R.S. § 39-26-102(7) Source: Colorado Department of Revenue Sales Tax Guide Source: Colorado Department of Revenue GIL-23-001 Source: Dining Establishments Industry Bulletin, Colorado Department of Revenue
Local sales-tax sourcing and home-rule jurisdictions
Direct answer For Colorado state and state-administered local sales taxes, sourcing is by destination—where the buyer receives or first uses the property or service. This typically means the delivery address for shipped orders, or the seller’s location for in-store pickup. Marketplace facilitators must collect and remit state and state-collected local tax based on the customer's destination. Home-rule jurisdictions (self-collected cities), however, impose and administer their own local taxes, may use different sourcing standards, and require retailers to register and remit directly; sellers cannot rely on state rules or filings to fulfill home-rule obligations.
Why C.R.S. § 39-26-104(3)(a) establishes a destination-based sourcing hierarchy: if the buyer receives the property at the seller’s business (as in in-store pickup), tax is sourced there; otherwise, the sale is sourced to the place the buyer receives possession (usually the shipping or delivery address). When neither is determinable, the statute requires fallback to the address in seller’s sales records, then to the buyer’s payment instrument address, and finally to the location from which the property was shipped. All state-administered local taxes follow these rules, and there are no published exceptions.
Marketplace facilitators must apply the exact same destination-based hierarchy for sourcing and are responsible for accurate tax collection for both state and all state-administered locals on behalf of marketplace sellers (C.R.S. § 39-26-104(3); 1 CCR 201-4, Rule 39-26-104-2; DOR Marketplace FAQ).
Home-rule (self-collected) jurisdictions: Over 70 Colorado cities are "home-rule" and self-collect local tax. DR 1002, issued by the Colorado DOR, lists which jurisdictions are home-rule. Each home-rule city may set its own sourcing, tax base, and exemption rules, and in some cities, origin-based sourcing or unique definitions may apply—retailers must consult each city's local ordinances or contact the local tax office. State and state-administered local tax compliance is not sufficient for home-rule jurisdictions; sellers must separately account for, register, and remit tax directly according to each home-rule city's practices.
For research and compliance, the DOR’s GIS Rate Locator and DR 1002 help determine if a destination is in a home-rule or state-collected area, but do not substitute for direct city-by-city verification of sourcing and tax base in home-rule jurisdictions.
Source support Source: C.R.S. § 39-26-104(3)(a) Source: 1 CCR 201-4, Rule 39-26-104-2 Source: Colorado Sales Tax Guide, Colorado Department of Revenue Source: Sales & Use Tax FAQ, Colorado Department of Revenue Source: Marketplace Facilitators, Colorado Department of Revenue Source: DR 1002 – Colorado Sales/Use Tax Rates Table, Colorado Department of Revenue
Caution / review status Not yet human confirmed. No state-published comprehensive list of home-rule city sourcing practices exists as of 2026-06-22; city confirmation required for local standards.