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Colorado sales tax changes, January 2018


 Lots of local sales and use tax changes coming to Colorado on Jan. 1.

Numerous changes affecting local sales and/or use tax take effect in Colorado on Jan. 1, 2018. These include new exemptions, new sales or use taxes, and new rate changes.

Sales and use tax compliance in Colorado is notoriously complex because the state allows home rule. Home rule localities administer and collect their own taxes and can amend exemptions, so long as they only impose exemptions allowed by the state. As evidenced below, this can lead to a mind-boggling assortment of tax rates and exemptions.

The state permits the following sales and use tax exemptions, which are listed by the letter when allowed by a city or county unless otherwise noted. The letters were assigned by the Colorado Department of Revenue, which doesn’t explain why it skips from H to K, etc.

A) Food for home consumption L) Beetle wood products

B) Machinery and machine tools (as defined on form DR 1191) M) School-related sales

C) Gas, electricity, etc., for residential use

N) Biogas production system components

D) Occasional sales for charitable organizations

O) Property used in space flight

E) Farm equipment

P) Machinery or machine tools equipment used for processing recovered materials per business list on Public Health & Environment

G) Food sold through vending machines

Q) Sales on retail marijuana and retail marijuana products

H) Low-emitting vehicles (over 10,000 lbs.)

Y) Motor vehicles

K) Renewable energy components

Z) Building materials

State-collected city tax changes

  • Erie, which has a sales and use tax rate of 3.5% and a service fee of 3.33%, will allow an exemption for C, D, and M.
  • Firestone is increasing its sales tax rate to 3.6% and its use tax rate to 2.6%. It has no service fee and allows an exemption for A, B, and K.
  • Firestone PIF1 is increasing sales tax to 2.35% and use tax to 2.6%. It has no service fee and allows an exemption for A, B, and K.
  • Firestone PIF2 is increasing sales tax to 2.1% and use tax to 2.6%. It has no service fee and allows an exemption for A, B, and K.
  • Morgan is increasing sales and use tax to 4%. It has no exemptions and imposes a 3.33% service fee.
  • Haxtun is increasing sales and use tax to 2.5%. It has no exemptions and imposes a 3.33% service fee.
  • Red Cliff has a 3% sales tax and is adding a 3% use tax. It allows no sales tax exemptions but will allow a use tax exemption for Z. It imposes a 3.33% service fee.
  • Rocky Ford is increasing sales tax to 4%, with an exemption for E. It also imposes a 3% use tax and a 3% service fee.
  • Wiggins has a 2% use tax with no exemptions and is adding a 2% use tax with an exemption for Z. It has no service fee.

State-collected county taxes

  • Clear Creek County is increasing sales tax to 1.65%. It has no exemptions, use tax, or service fee.
  • Las Animas County is adding a 1.5% sales tax with no exemptions, and a 1.5% use tax with exemptions for Y and Z. It has a 3.33% service fee.
  • Larimer County is dropping sales tax to 0.55%, the same as use tax. It has a service fee of 2.22% and sales tax exemptions for A, B, C, D, E, G, H, and K.
  • Ouray County is increasing sales tax to 2.55%. It has no exemptions or use tax but does have a service fee of 3.33%.
  • San Juan County is increasing sales tax to 6.5%. It, too, has no exemptions or use tax but a service fee of 3.33%.

State-collected special district taxes

The following special districts have no use tax and a service fee of 3.33%.

  • La Junta Health Service District is imposing a new 1% sales tax. It allows exemptions for A, B, C, D, E, G, H, K, L, M, N, O, P, and Q.
  • Mesa County Public Safety Improvement is adding a sales tax of 0.37%. It allows an exemption for A, B, C, D, E, G, H, K, L, and M.
  • Vernon Country Club Metropolitan District has a new sales tax of 2% and allows an exemption for A, B, C, D, E, G, H, K, L, M, N, O, P, and Q.
  • Red Sky Ranch Metropolitan District is adding a sales tax of 5.5%. It allows an exemption for A, B, C, D, E, G, H, K, L, M, N, O, P, and Q.
  • South Park Health Service District is imposing a new sales tax of 1% and allows an exemption for A, B, C, D, E, G, H, K, L, M, N, O, P, and Q.

Self-collected local jurisdiction taxes

  • Longmont is increasing sales tax. The new local rate for sales and use tax is 3.53%, and there is a 3% service fee.
  • Pueblo is also increasing sales tax and will have a new local sales and use tax rate of 3.7%.

Contact the cities directly for information about exemptions. See the Colorado Department of Revenue for more information about any of the above changes.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.