Colorado Use Tax Calculator
An essential tool to accurately determine the use tax owed in Colorado for out-of-state purchases.
Enter the total price of the item(s) purchased without paying Colorado sales tax. (USD)
Select the city/county where the item will be used, stored, or consumed.
Enter the rate of sales tax you paid to another state, if any. Colorado offers a credit for this.
Total Colorado Use Tax Due
State Tax (2.9%)
Local Tax
Total Rate
Tax Credit
Tax Breakdown Chart
What is Colorado Use Tax?
Colorado use tax is a complement to the state’s sales tax. It is a tax imposed on the privilege of storing, using, or consuming tangible personal property in Colorado upon which a Colorado sales tax has not been paid. Essentially, if you buy an item from an out-of-state seller (like an online retailer) who doesn’t collect Colorado sales tax, you are legally obligated to report and pay the use tax directly to the Colorado Department of Revenue.
This tax ensures that all purchases, regardless of where they are made, are taxed fairly. It applies to both individuals and businesses. For example, knowing how to calculate use tax colorado is crucial if you buy expensive furniture from a website that doesn’t charge you tax at checkout. The use tax rate is the same as the sales tax rate for the location where you use the item.
How to Calculate Use Tax Colorado: The Formula
The calculation for Colorado use tax is straightforward. It involves applying the correct tax rate to your purchase price and then subtracting any sales tax you’ve already paid to another state.
The basic formula is:
Total Use Tax = (Purchase Price × Combined Use Tax Rate) – Tax Paid to Another State
Where the Combined Use Tax Rate = State Rate (2.9%) + County Rate + City Rate + Special District Rate.
This calculator helps you find the correct local rates, but you can also look them up on the Colorado Department of Revenue website.
| Variable | Meaning | Unit | Typical Range |
|---|---|---|---|
| Purchase Price | The net price of the item or service purchased. | USD ($) | $1 – $100,000+ |
| State Use Tax Rate | The statewide tax rate set by Colorado. | Percentage (%) | 2.9% |
| Local Use Tax Rate | The combined rate for the city, county, and any special districts. | Percentage (%) | 0% – 8.3% |
| Tax Paid to Another State | A credit for sales tax legally paid in another jurisdiction. | USD ($) | Varies by purchase |
Practical Examples
Example 1: Buying Electronics Online
An individual living in Boulder buys a new laptop online for $2,000 from a retailer in a state with no sales tax. The retailer does not collect Colorado sales tax.
- Inputs: Purchase Price = $2,000, Location = Boulder, Tax Paid Elsewhere = $0.
- Calculation: Boulder’s total use tax rate is approximately 8.845% (2.9% State + 1.165% County + 3.86% City + 0.92% RTD/CD). The tax owed is $2,000 * 0.08845 = $176.90.
- Result: The individual owes $176.90 in Colorado use tax.
Example 2: Business Software Purchase
A business in Denver purchases a yearly software license for $10,000 from a company in California. The California company does not collect Colorado sales tax.
- Inputs: Purchase Price = $10,000, Location = Denver, Tax Paid Elsewhere = $0.
- Calculation: Denver’s total use tax rate is 8.81% (2.9% State + 4.81% City + 1.1% RTD/CD). The tax is $10,000 * 0.0881 = $881.00.
- Result: The business owes $881.00 in use tax. This is an important part of understanding Colorado business tax obligations.
How to Use This Use Tax Calculator
- Enter Purchase Amount: Input the total cost of the goods you purchased on which no Colorado sales tax was paid.
- Select Location: Choose the city or county where the item will be used. This is critical for determining the correct local tax rate. If your location isn’t listed, you may need to find your rate on the official state lookup tool and use our “Custom Rate” option.
- Enter Tax Already Paid: If you paid sales tax to another state, enter that tax rate here. The calculator will determine your credit.
- Review Results: The calculator instantly shows the total use tax due, along with a breakdown of state and local amounts.
- Analyze the Chart: The bar chart provides a simple visual of how much of your tax is going to the state versus local jurisdictions.
Key Factors That Affect Colorado Use Tax
- Location of Use: This is the most significant factor, as hundreds of local tax jurisdictions exist in Colorado with different rates.
- Purchase Price: The tax is calculated directly on the net purchase price of the goods.
- Tax Paid at Point of Sale: If you paid any sales tax to another state, you are eligible for a credit up to the amount of use tax you would owe in Colorado.
- Item Exemptions: Certain items that are exempt from sales tax are also exempt from use tax, such as specific foods, prescription drugs, and manufacturing equipment. Check our guide to tax exemptions for more details.
- Type of Purchase: Use tax generally applies to tangible personal property. Services are often, but not always, exempt.
- Filing Status: Individuals typically remit use tax annually with their state income tax return, while businesses may need to file more frequently.
Frequently Asked Questions (FAQ)
- 1. What is the difference between sales tax and use tax?
- Sales tax is collected by the seller at the point of sale. Use tax is paid directly by the consumer when sales tax was not collected. They are complementary and have the same rates.
- 2. How do I pay the use tax I owe?
- Individuals can typically report and pay consumer use tax on their Colorado Individual Income Tax Return (DR 0104). Businesses have different filing requirements. See the guide to filing CO taxes.
- 3. Do I have to pay use tax on every out-of-state purchase?
- You owe use tax on all taxable purchases of tangible personal property for storage or use in Colorado if the seller did not collect Colorado sales tax.
- 4. What happens if I don’t pay use tax?
- Failure to pay use tax can result in penalties and interest charges from the Colorado Department of Revenue if you are audited.
- 5. Is freight or shipping included in the purchase price?
- If the shipping and handling charges are stated separately from the item’s price, they are generally not subject to use tax. If they are included in the price, they are taxable.
- 6. What is the Colorado state use tax rate?
- The state use tax rate is 2.9%, identical to the state sales tax rate. However, your total rate will be higher due to local taxes. For more details, see this article on local tax rates.
- 7. Can I get a credit for sales tax paid to another country?
- No, the credit is only for sales or use taxes paid to another state within the United States.
- 8. Where can I find the most accurate tax rates?
- The official source for all state and local rates is the Colorado Department of Revenue. They provide online tools to look up rates by address. For a simplified view, check our sales tax summary page.