The statutory state income tax rate for resident individuals, estates and trusts is 4.63% of Colorado taxable income. The Colorado taxable income is the Federal Taxable Income, plus or minus various state deductions, interest and refunds. The Colorado corporate income tax applies to net income derived from Colorado sources. The corporate tax rate is also 4.63%.
Sales and Use Tax
The state imposes a sales and use tax of 2.9%. Many cities and countries impose their own local sales/use tax on purchases and transactions within their boundaries. The Colorado Department of Revenue, in addition to collecting state sales and use tax, collects sales tax on behalf of more than 175 cities and counties. These jurisdictions are referred to as “state collected.” All Colorado counties that impose sales tax are state collected.
RTD/CD/FD Sales and Use Tax
Most of the Denver metropolitan area lies within a special tax district. It is actually three separate tax districts with identical boundaries. The authorities and sales/use tax rates are: Regional Transportation District (RTD), 0.6%; Scientific and Cultural Facilities District (CD), 0.1%; and Metropolitan Football Stadium District (FD), 0.1%. The total sales/use tax collected for this combined district is 0.8%. RTD/CD/FD tax is imposed on all transactions that are subject to state sales and use tax. Exception: RTD/CD/FD, sales tax, but not use tax, is imposed upon machinery and machine tools even when those items are exempt from state sales and use tax.
Revenues from the RTD tax help finance the Denver metro area public transportation system. Proceeds from the CD tax are distributed to counties within the district for museums, zoos, the arts and other cultural programs. FD tax revenues helped finance the building of a major league football stadium in Denver.
Alcohol Beverage Taxes
The tax rate for beer is 8 cents per gallon; for vinous liquors (wine), 7.33 cents per liter; and for spirituous liquors, 60.26 cents per liter. Hard cider made from apples or pears is taxed at the rate of 8 cents per gallon and otherwise taxed as vinous liquor unless expressly excepted. Other ciders continue to be taxed the same as vinous liquors.
Cigarette Tax and Tobacco Products Tax
The cigarette tax rate is 1 cent per cigarette. There is also a tax on other tobacco products of 20% of the manufacturer’s list price. The cigarette and tobacco products tax is paid by the distributor, and is included as part of the retail price paid by the consumer. The consumer pays no sales tax on cigarettes. Other tobacco products are subject to sales tax at the point of sale to the consumer.
Estate, Inheritance and Gift Taxes
Colorado estate tax replaced the inheritance tax for decedents who died on or after Jan. 1, 1980. A Colorado Estate Tax Return (DR 1210) must be filed if a United States Estate (and Generation-Skipping Transfer) Tax Return (federal form 706, or 706NA for a non-resident alien decedent) is required to be filed. The Colorado estate tax is the state death tax credit allowable on the federal return, but adjustments may be made if one or more additional states are involved.
Fuel Tax Information
Fuel Taxes – Effective January 1, 2001, motor fuel and aviation fuel tax returns will be required to be filed electronically by all reporters with more that twenty receipts and disbursement transactions.
Motor Fuel Taxes – Gasoline and/or Special Fuel Excise Taxes: Colorado charges a fuel excise tax on motor fuels. The tax is collected by licensed fuel distributors at the wholesale level, upon acquisition at the terminal rack. The tax rate is .22 cents per gallon for gasoline (including gasohol). The special fuel tax rate is .205 cents per gallon.
In addition to state taxes, some counties, cities and special districts impose sales and use, lodging, and/or other taxes. Sales taxes charged in the metro area are approximately 7.8%, although some unincorporated areas charge only 5.8%.