Colorado Business & Personal Taxes
Colorado provides a competitive business tax structure that rewards investment and innovation. With very low taxes at the state level, and a wide range of local tax structures, Colorado offers almost unlimited choices to meet the needs of all types of businesses. Under Amendment One, also known as the Taxpayer’s Bill of Rights (TABOR) passed by the voters of Colorado in 1992, a constitutional limit was placed on both revenues and expenditures of state and local governments. Without voter approval, both are limited to the increase in inflation plus the population growth rate. TABOR & Referendum C
Corporate Income Tax
Colorado's corporate income tax rate is a flat 4.63%. It is a business tax levied on the gross taxable income of most businesses and corporations registered or doing business in Colorado. Colorado ranks among the top-20 states for best corporate tax system and business friendly tax climate according the Tax Foundation's 2023 State Business Tax Climate Index.
Sales and Use Taxes
Colorado's sales and use tax is 2.9% on goods purchased by a business that are not intended for resale. Services and food items are excluded from sales tax, with the exception of soda and candy. Use taxes substitute for sales taxes in cases where an item is purchased for consumption in Colorado from a source outside Colorado or other circumstances where a sales tax was not paid. State Sales Tax Exemptions & Deductions.
An employer's unemployment insurance tax liability is based on the taxable wage base, which is the first $20,400 of each worker's wages. Specific information on the tax rate for a business can be obtained from the Colorado Department of Labor and Employment (CDLE) - Unemployment Insurance Tax Branch at 303-318-9000 or 1-800-388-5515.
Worker's compensation insurance is purchased through private insurance companies in Colorado. The Colorado Legislature created Pinnacol Assurance, a nonprofit insurance carrier, to sell workers' compensation insurance. For more information on workers’ compensation, visit Colorado Department of Labor & Employment and Colorado Division of Insurance.
The State of Colorado does not impose property taxes on businesses; local governmental units assess property taxes primarily to fund public school operations and local government services.
The Colorado Legislature determines assessment rates, and local taxing entities determine mill levies. Check Montrose assessment rate for commercial and industrial property and the countywide local mill levies. Cities or counties in state-designated Enterprises Zones have the option of providing an incentive payment to new companies. Local governments have the option to negotiate up to 50% rebate or credit on their portion of personal property tax as an economic development incentive
Personal property (machinery and equipment) used in commercial and industrial operations is also assessed. For information regarding Business personal property tax including exemptions see the Colorado Department of Local Affairs website.
Inventory taxes are not assessed in Colorado and there is no franchise tax.
Colorado levies a severance tax for the removal of non-renewable natural resources from the earth such as metallic minerals and energy resources. For information regarding this tax visit Colorado Department of Revenue.
Investment Tax Credits
The Colorado Tax Equity Act, signed into law during the 1987 legislative session, reinstates the Colorado Investment Tax Credit. For information on tax credits see Office of Economic Development and International Trade (OEDIT).
Colorado Personal Taxes
The Colorado Individual income tax is a flat rate of 4.40%. Colorado Department of Revenue Local governments in Colorado do not assess income taxes.
The State of Colorado levies a 2.9% sales tax on all non-food retail sales. Cities, counties, and special districts are permitted to collect additional local sales tax by public referendum. See Colorado Department of Revenue for more rate information.
Residential property is assessed at percentage of market value which fluctuates from year to year due to a statutory formula that specifies shares of revenue from commercial versus residential property. The mill levy, which is the tax rate on each dollar of assessed valuation, varies within the state. Mill levies for cities and counties in Colorado can be found in the Colorado Economic and Demographic Information System (CEDIS), which is maintained by the Colorado Department of Local Affairs .