CO
Colorado Small Business Tax Guide
What Colorado's Department of Revenue (DOR) and the IRS say about sales tax, licenses, income tax and due dates, each figure with its source and date. Meant to inform, not tax advice.
Disclaimer: This page is educational content only. Tax laws change, and your situation may differ. It is not legal, tax, or financial advice. Consult a qualified professional licensed in Colorado before making filing or planning decisions.
Tax landscape for small businesses
The Colorado Department of Revenue (DOR) runs the state's sales tax and income tax. Each rate and due date on this page comes word for word from the DOR's guides or from the IRS, dated; what those pages don't state is left out, including any Secretary of State filing fees.
The DOR's Sales Tax Guide (Colorado, checked October 31, 2026) says: "Colorado state sales tax is imposed at a rate of 2.9%." It continues: "Any sale made in Colorado may also be subject to state-administered local sales taxes." On services, the guide says: "In general, the tax does not apply to sales of services, except for those services specifically taxed by law." It qualifies that straight away: "in the case of a mixed transaction that involves a bundled sale of both tangible personal property and service (whether or not such service is specifically taxed), the entire purchase price may be taxable unless certain conditions exist." Its Part 2 also says the tax applies to retail sales of tangible personal property "except when such sales qualify for an exemption specifically authorized by law."
Worked example, sample figures, state tax only: a bike builder sells a customer a $1,000.00 frame. At the DOR's quoted 2.9% (Colorado, checked October 31, 2026), the state tax line is $1,000.00 × 2.9% = $29.00, and the invoice comes to $1,029.00 before local tax. Local rates are in the DOR publication "Colorado Sales/Use Tax Rates (DR 1002)"; add any that cover the sale.
Tax overview
Each row lists a tax area and its notes. Confirm current figures with your state's tax agency or the IRS.
| Tax type | Rate or basis | Notes |
|---|---|---|
| State sales tax (DOR) | "2.9%" | DOR Sales Tax Guide, Colorado, checked October 31, 2026. State-administered local taxes are charged on top where they apply. |
| Individual income tax (DOR) | "4.4%" for tax year "2025" | DOR Individual Income Tax Guide, Colorado, checked October 31, 2026: "The Colorado income tax rate varies by tax year." |
| Self-employment tax (federal) | "15.3%" | In the US (federal), from the IRS; its page shows October 30, 2026 as last reviewed or updated. |
Filing requirements
This list isn't a complete checklist for your business.
Get a Colorado sales tax license
Who has to collect: the DOR's Sales Tax Guide (Colorado, checked October 31, 2026) says "In general, any retailer making sales in Colorado is required to collect the applicable state and state-administered local sales taxes." and "A retailer may be required to collect tax even if it has no physical presence in Colorado." For sellers without a Colorado location, its Part 4 sets out a "Small retailer exception" that applies when their retail sales into Colorado "in both the current and previous calendar years are less than $100,000", and says "All retail sales are considered for the purpose of the $100,000 threshold, regardless of whether those sales would be subject to Colorado tax." The guide adds: "Any retailer that is required to collect Colorado sales tax must obtain and maintain a Colorado sales tax license."
File sales tax returns on schedule
The same guide (Colorado, checked October 31, 2026) continues: "They must also file returns and remit collected taxes at regular intervals, generally on a monthly basis."
Business income tax return
The DOR's business income tax page (Colorado, checked October 31, 2026) says: "Business income tax returns are due by the fifteenth day of the fourth month after the end of your tax year, or by April 15 for traditional calendar year filers." On extensions: "This is an extension of time to file, not to pay."
Colorado estimated payments
The DOR's Individual Income Tax Guide (Colorado, checked October 31, 2026) says: "If an individual receives income from other sources, they may be required to remit quarterly estimated tax payments in anticipation of the Colorado income tax they will owe."
Federal estimated tax
In the US (federal), the IRS's estimated taxes page (last reviewed or updated September 25, 2026) says: "Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed."
Deductions and write-offs
Confirm with your state how it treats each item.
- Employer-equivalent SE tax: in the US (federal), IRS guidance on SE tax (last reviewed or updated October 30, 2026) says "you can deduct the employer-equivalent portion of your SE tax when calculating your adjusted gross income."
- Self-employed health insurance: per the same IRS page, in the US (federal), "a deduction, for income tax purposes, is allowed to self-employed individuals for the cost of health insurance."
- Colorado credits: the DOR's guide (Colorado, checked October 31, 2026) says "Colorado allows a variety of income tax credits that may be applied against an individual’s income tax liability." Ask the DOR or a tax professional which ones fit you.
Practical tips
- Decide whether each line is a good or a service before you add tax; the DOR's guide (Colorado, checked October 31, 2026) treats them differently, and it says a bundled sale of both may make the whole price taxable, as quoted above.
- Billed's invoice software page says: "Save your tax rates and settings once, and Billed calculates taxes automatically when you create invoices and estimates."
- Check home-rule cities on their own: the DOR's guide (Colorado, checked October 31, 2026) says the Department "does not administer and collect sales taxes imposed by certain home-rule cities".
- Billed's expense tracking page says: "Give every expense a category so your spending is already sorted when you file taxes or hand the year to your accountant."
Frequently asked questions
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At a glance
| Topic | Where the Colorado DOR covers it |
|---|---|
| State and local sales tax | Sales Tax Guide |
| Sales tax license | Sales Tax Guide |
| Local rates by jurisdiction | DR 1002 |
| Personal income tax rate | Individual Income Tax Guide |
| Business income tax due date | Business income tax page |
When this isn't for you
This page leaves out Colorado payroll taxes, home-rule city rules in detail, entity filing fees and audits. For any of those, or for advice about your own taxes, contact the Colorado DOR or a tax professional.