Colorado – CO Sales Tax Calculator: User Guide

Are you planning to start an online store or a Physical Store in Colorado? Then you would definitely be needing our Colorado Sales Tax calculator along with a comprehensive guide to help you deal with Sales Tax like a professional.

Colorado Sales Tax Facts:

• Colorado is a destination-based State which levies 2.9% of sales tax on State level.
• The counties are allowed to levy local sales tax ranging from 0% to 6.5%.
• The 130 out of 415 cities in Colorado levy local sales tax ranging between 0% and 7%.
• The special sales tax rate ranging from 0% to 2.1% may also apply to sales, purchases, and leases of tangible personal property and taxable services.
• The lowest possible sales tax rate is 2.9%, which is charged in Louisville, Colorado.
• The highest possible sales tax rate is 11.2%, which is charged in Winter Park, Colorado.
• The average combined sales tax rate in Colorado is 6.012%.
• Prescription Drugs and groceries are among goods that are exempted from sales tax in Colorado.
• Companies and Individuals can apply for the Colorado Sales Tax Exemption, who are purchasing goods for resale, improvement, or as raw materials.
• Online and Out-of-state purchases which are not subjected to Colorado Sales tax, must be subjected to 2.9% of Colorado Use Tax.
• Unfortunately, Colorado State doesn't have any scheduled sales tax holidays.

How to calculate Sales Tax in Colorado?

Colorado charges sales tax on the destination-based on the retail sale of tangible personal properties (TPP), including goods, wares, merchandise, products and commodities, and certain services. However, items purchased for resale, improvement, or as raw materials aren't taxed for distributers.

This tax is collected, managed, and transferred to the Colorado Department of Revenue by the business owner while staying in compliance with state laws and avoid penalties and interest.

The sales tax depend on three factors:

1. Nexus: It is a connection of business with a state. The business is only liable to pay taxes to the states with Nexus.
2. Location and Products: The sales tax rate varies from product to product and location to location, so you must check the sales tax rate applicable to your product according to the product category, county, and city in Colorado.
3. Exemptions: Almost all goods are eligible for sales tax regulation. However, products, including groceries, prescription medicine, and few more are exempted under Colorado Law. So you should check with Colorado state government as to which goods and services sold in Colorado ` are subject to sales tax.

To calculate Sales Tax in Colorado, follow the steps below:

Step 1 – Determine your Nexus:

You, as a Business owner, are only required to collect sales tax if you have Sales Tax Nexus in the Colorado State. And to determine your Nexus in Colorado, you must have any of the following:

• A physical place of business, salesroom or an office in Colorado
• A warehouse, distribution center or inventory stored in the state
• Representatives like employees, Independent contractors in Colorado

Step 2 – Determine the Sales Tax Rate:

Once you have determined that your Nexus is with Colorado, next is to deduce the Sales Tax rate (State + Local Sales Tax) applicable on your product, for which you can refer the tables below:

Colorado Sales Tax Rates by Location:

The state-wide Sales Tax rate in Colorado is 2.90%. Besides, many cities and counties levy additional local sales tax on tangible personal property and certain services. Following are the Sales Tax rate on State, County, and city level in Colorado:

Step 3 – Calculate Sales Tax:

After the determination of the Sales Tax rate according to the location and type of purchases, it is easy to calculate the sales tax amount charged on the product and gross price (amount after tax) of a product.

Example:

For instance, you are selling a makeup kit on your online store, having a net price tag of $146. The buyer wants it delivered in Castle Rock, Colorado. The amount that a buyer has to pay (including sales tax) on a check out would be:

Manual Method:

Net Price (amount before Tax) of a makeup kit: $146

Total Sales Tax rate: 3.4% (Castle Rock) + 1.6% (Douglas County) + 2.9% (Colorado State) = 7.9%

Total Sales Tax amount = $146 x 7.9% = $11.5

Gross Price (Amount after Tax) = 146 + 11.5 = $157.5

It means the amount the buyer has to pay for a Makeup Kit on a cash counter would be $157.5.

Using our Sales Tax Calculator:

All of the steps mentioned above can be skipped to get an instant result using our Sales Tax Calculator. All you need is:

1. Input the $157.5 Net Price of a Makeup Kit as Amount Before Tax
2. Input or select 9% of the combined Sales Tax rate on the Tax Rate menu.

Our calculator will automatically calculate the result, and represents it in 3 different forms, as shown in the image below:

Reverse Sales Tax Calculation

In the example above, we have explained to you to calculate the Sales Tax amount payable in a product, and the Gross Price of the Product.

But there are also instances when you are required to deduce how much sales tax buyer has actually paid on a product or you may want to check the accuracy of the sales tax indicated on your item's receipt.

This is where the Reverse Sales Tax Calculation Kicks in. And luckily, our Colorado Sales Tax Calculator can perform this calculation like a Pro.

Example:

Your buyer has paid $90 for a Hair Straightener at your store in Loveland, Colorado. Now the buyer is inquiring how much the Hair Straightener actually cost before the sales tax was added. So you need to follow the steps below to determine the amount before tax (net price) of a Hair Straightener:

Gross Price (Amount after Tax) of Hair Straightener: $90

Total Sales Tax rate: 3% (Loveland) + 0.80% (Larimer County) + 2.9% (Colorado State) = 6.7%

Manual Method:

Gross Price with sales tax = [Net Price × (tax rate in decimal form + 1)]

90 = [Net Price x ((10/100) + 1)]

90 = Net Price x 1.07

$84.1 = Net Price

So the original Price (net price) of the Hair Straightener was $84.1.

Using our Sales Tax Calculator:

You can also use our Sales Tax Calculator for Reverse Sales Tax calculation to skip the above mentioned manual method. All you need is:

1. Input the $90 Gross Price of Hair Straightener as Amount after Tax
2. Input or select 6.7% of combined Sales Tax Rate on the Tax Rate

Our calculator will automatically calculate the result and represents it in 3 different forms.

FAQs