Colorado Consumer Tax Laws

Most (but not all) states collect taxes on retail sales, while virtually all states levy taxes on such items as cigarettes, gasoline, and alcoholic beverages. State consumer taxes are generally used to raise revenue for the state, but some taxes are also intended to discourage certain behavior deemed unhealthy or contrary to the state's well-being. For instance, alcohol is often linked to domestic violence and other crimes, and can be deadly when intoxicated people get behind the wheel of a car.

Colorado Consumer Taxes at a Glance

The state sales tax rate in Colorado is 2.9 percent, which is extremely low. But here's the catch: Colorado has a complex "home rule" tax system in which local municipalities levy additional taxes on sales of up to 10.4 percent. For instance, Denver's sales tax rate is 3.65 percent (effective Jan. 1, 2015), which totals 6.55 percent when state taxes are included.

And while state law limits gambling taxes to 40 percent, the effective rate for commercial, brick-and-mortar casinos is 20 percent. Of that, 50 percent goes to Colorado's general fund.

The following chart lists the tax rates applicable to various consumer transactions. See FindLaw's Tax Law section for more general information about state and federal taxes.

Sales Tax 2.9% §39-26-106 (when local taxes are added, the total sales tax rate may be as high as 10.4%)
Cigarette Tax 84¢ per pack of 20 cigarettes §39-28-103
Marijuana Tax 10% flat rate on all sales
Gasoline Tax per Gallon 40.4¢ (includes 18.4¢ federal tax) §39-27-102
Use Tax 2.9% §39-26-202
Liquor Tax Beer 8¢/gal.; Wine 28¢ per galllon; Spirits $2.28 per gallon §§12-47-503
Gambling Tax Not to exceed 40% of adjusted gross profits §12-47.1-601

Note: State laws are constantly changing, including those affecting consumer tax rates and regulation. Be sure to contact a Colorado tax attorney or conduct your own legal research to verify the state law(s) you are researching.

What is Use Tax?

States usually can't tax you for out-of-state purchases, but a "use" tax may be levied on some items bought across state lines. For instance, those who purchase automobiles in states with lower taxes and then drive them back to their home state may be required to pay the difference. The purpose of this is to encourage in-state purchases.

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Colorado Consumer Tax Laws: Related Resources

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