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Colorado State Taxes

Colorado State Taxes

State Taxes at a Glance – Colorado

Type of Tax2023
Individual Rates4.40% (flat tax)
Corporate / Business Tax Rates4.40% (flat tax)
Gross Receipts TaxNone
Sales Tax7.78% (average)
Property Taxes0.54% as a percentage of primary home
Estate or Inheritance TaxNone

State Income Taxes in Colorado

The state of Colorado is one of few states with a flat individual income tax. Colorado’s individual tax rate is 4.55% of your Federal Taxable Income.

Local and City Income Taxes

Colorado also has Local & City income tax* in addition to the regular state income tax. Colorado’s the Local & City tax is unique, since it is accessed on wages (as an additional Payroll Tax). The only other state that does this is West Virginia.

There are just five (5) cities in Colorado which the additional tax is assessed. They are:

  • Aurora – $2 per month
  • Denver – $ 5.75 per month
  • Glendale – $10 per month
  • Greenwood Village – $4 per month
  • Sheridan – $6 per month

State Business Taxes in Colorado

The state of Colorado has the same rate of 4.40% for both individual and corporate taxes. It is considered a state with one of the most favorable business rates in the country.

Sales and Property Taxes in Colorado

Sales Tax – like many states, Colorado has multiple tax rates. One at the state level and another at the local level. The state rate is 2.90% the average local rate is 4.88% (total average rate for Colorado Sales Tax is 7.78%)

Property Taxes in Colorado – the average property tax rate for residential property in the state of Colorado is 0.54%, making it a very preferable place to own property (the national average is 1.08%). 

Payroll taxes in Colorado

Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:

  • Wage Base – Colorado has a wage base of $20,400
  • UI Rates – range from 0.75% to 10.39%
  • Schedules – Colorado has multiple rate schedules regarding UI

Colorado DMV Taxes

Colorado DMV fees are referred to as an Ownership Tax which is deductible. These taxes are based on the age of vehicle and the original assessed value. The Ownership Tax ranges between 0.50% and 2.10%. You may look up your ownership tax on the Colorado DMV website here.

Colorado Domicile

The state of Colorado presumes you’re a resident if you maintain a permanent place of abode within the “Centennial State” for over 6 months in a taxable year.

State Tax on Social Security Benefits

Colorado is one of the few states that assesses tax on Social Security benefits, however it depends on your age.

AgeAmount of Social Security Taxed
Between 55 and 65Up to $20,000 is exempt
Age 65 and olderNone

Colorado Business Entities – LLCs

Colorado is one of the least expensive state to open an LLC. Here are some important facts:

  • Colorado’s annual LLC fee at only $10.
  • When you register with the state, you pay a one-time fee of $50
  • Secretary of State of Colorado website – click here