Sales Tax Rules
Colorado imposes a state sales tax rate of 2.9%, with a maximum combined rate (state plus local) of 11.2% when local taxes are added. Economic nexus is triggered at $100,000 in sales — meaning out-of-state businesses that exceed this threshold must collect and remit Colorado sales tax. SaaS and digital software products are generally exempt from sales tax in Colorado. Groceries are exempt from state sales tax.
SaaS Tax Details
Generally exempt if no tangible media is transferred (local rules vary).
Grocery Details
Exempt from state tax; most local jurisdictions tax groceries.
What is the sales tax rate in Colorado?
Colorado's state sales tax rate is 2.9%. When local taxes are added, the maximum combined rate can reach 11.2%. The actual rate you pay depends on the county and city where the purchase is made.
What is the economic nexus threshold in Colorado?
Colorado requires out-of-state businesses to collect sales tax once they exceed $100,000 in sales in a calendar year. Once nexus is established, the business must register, collect, and remit Colorado sales tax.
Is SaaS taxable in Colorado?
No. SaaS products are generally exempt from sales tax in Colorado. Generally exempt if no tangible media is transferred (local rules vary).
Are groceries taxed in Colorado?
Groceries are generally exempt from sales tax in Colorado. Exempt from state tax; most local jurisdictions tax groceries.
Are digital goods taxable in Colorado?
Yes. Colorado taxes digital goods including downloaded software, music, movies, and e-books. Businesses selling digital products to Colorado customers should collect sales tax.
Are clothing items exempt from sales tax in Colorado?
Clothing is subject to sales tax in Colorado at the standard state rate.
How often do I need to file sales tax in Colorado?
Colorado requires sales tax filing on a Monthly, Quarterly, or Annual. Online filing is available through the official Department of Revenue portal.
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Official Source
Colorado Department of Revenue
Last verified: 2026-03-26 · Always confirm current rates with your tax advisor before filing.