Colorado Income Tax Calculator

Taxes in Colorado

Colorado State Tax Quick Facts

• Income tax: 4.40% flat rate
• Sales tax: 0% - 8.3%
• Property tax: 0.51% effective rate
• Gas tax: 22 cents per gallon of regular gasoline, 20.5 cents per gallon of diesel

The Centennial State has a flat income tax rate of 4.40%, and the lowest statewide sales taxes in the country – aside from states with no sales tax –  at just 2.90%. However, because of numerous additional county and city sales taxes, actual combined rates can be as high as 11.20%. When considering these local taxes, the average Colorado sales tax rate is 7.02%.

On the other hand, homeowners in Colorado get a break on real estate taxes. The state’s property tax rates are among the nation’s lowest, with an average effective rate of just 0.51%.

A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Colorado Income Taxes

The state income tax in Colorado is assessed at a flat rate of 4.40%, which means that everyone in Colorado pays that same rate, regardless of their income level. There are eight other states with a flat income tax. Among these states, Colorado’s rate ranks in about the middle of the pack. Colorado’s income tax is also fairly average when compared to the top rate of those states with a progressive income tax.

That 4.40% applies to Colorado taxable income, which is equal to federal taxable income. This means that taxpayers who do not itemize deductions on their federal income tax return do not have the option to do so on their state return; conversely, taxpayers who do itemize deductions federally must claim the same deductions on their state return.

There are a couple of exceptions to this. One is that taxpayers who make donations to charity, but do not itemize deductions on their federal return, may be able to deduct those donations on their Colorado state income taxes. Another is the deduction for state income taxes (also known as the SALT deduction). Taxpayers who itemize deductions federally, and claim this deduction, must add it back to their Colorado taxable federal income tax return.

Colorado Tax Credits

After calculating their initial tax bill, there are some additional tax credits Coloradans can claim. The most significant of these are the Child Care Contribution Credit (which is equal to a percentage of the similar federal credit), the Earned Income Credit (equal to 10% of the federal credit) and the Alternative Fuel Credit, which is available to taxpayers who purchase an alternative fuel vehicle such as a battery-powered electric car.

Colorado Sales Tax

The statewide sales tax in Colorado is just 2.90%, lowest among states with a sales tax. However, as anyone who has spent time in Denver, Boulder or Colorado Springs can tell you, actual sales tax rates are much higher in most cities. This is because many cities and counties have their own sales taxes in addition to the state sales tax. The table below shows sales tax rates for all counties in Colorado.

Property and tangible goods (including electronically delivered goods such as music downloads) are subject to sales tax in Colorado, but most services are not. While prepared food is taxable, most food that is purchased for consumption at home (i.e. groceries) is nontaxable. Prescription drugs are also tax-exempt in Colorado.

Colorado Property Tax

If you’re thinking about finally investing in that Rocky Mountain ski lodge, there’s some good news: Colorado has some of the lowest property taxes in the country. The state’s effective property tax rate (median property taxes paid as a percentage of the median home value) of 0.51% is one of the lowest in the U.S. In some areas, effective property taxes are even lower. In Gilpin County, for example, where homeowners there pay about $1,121 annually in property taxes, the rate is just 0.27%.

Before purchasing your new chalet, you’ll want to take a look at our Colorado mortgage guide to get a full understanding of the mortgage market in the Centennial State.

Colorado Marijuana Tax

As of 2014, marijuana is both legal and taxable in Colorado. The marijuana tax rate is a combined 30%, though consumers will only pay half of this. More specifically, marijuana retailers must pay a 15% excise tax when they buy from a cultivator, leaving consumers to pay the other 15% in the form of a sales tax at the time of purchase. The 2.9% state sales tax rate only applies to medical marijuana.

Colorado Estate Tax

There is no estate or inheritance tax in Colorado.

Colorado Capital Gains Tax

Most capital gains in Colorado are taxed at the standard income tax rate of 4.40%. However, certain long-term gains are exempt. Gains from certain property acquired on or after May 9, 1994, which was held for at least five years before being sold, may be exempt up to a limit of $100,000.

Colorado Gas Tax

The gas tax in Colorado is 22 cents per gallon of regular gas, one of the lowest rates in the U.S. Diesel fuel is taxed at a rate of 20.5 cents per gallon.

• The highest point in Colorado is the peak of Mount Elbert, at 14,433 feet. The lowest point is along the Arkansas River, at 3,350 feet.
• Colorado’s nickname is the Centennial State because it achieved statehood less than a month after the centennial of the U.S. Declaration of Independence.