Colorado State Taxes: Overview
Colorado has a flat 4.4% personal income tax rate. When it comes to property taxes, Colorado has a relatively low rate, and gas taxes in Colorado are on the low end as well. However, Colorado’s sales tax is generally relatively high and can exceed 11% in some parts of the state.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
Colorado Income Taxes
Colorado has a flat income tax rate of 4.4%.
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- Some cities and localities in Colorado impose a monthly payroll tax.
- Social Security Benefits: Social Security income is deductible for taxpayers aged 65 and over.
- For the 2023 tax year, taxpayers under age 55 can exclude up to $15,000 of income from a military retirement plan.
- Railroad Retirement benefits are exempt from state tax in Colorado.
Colorado Sales Tax
Colorado’s state sales tax is 2.9%. Localities can add as much as 8.3%, and the average combined Colorado sales tax rate is 7.77%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
What are Property Taxes in Colorado?
In Colorado, the average property tax rate as a percentage of assessed home value is .55% according to the Tax Foundation.
Colorado Property Tax Breaks for Retirees
Colorado Property Tax Exemption for Adults 65 and Older: Colorado offers a property tax exemption for older adults aged 65 or older. There are specific requirements that must be met, but if you qualify, 50% of the first $200,000 of the value of a primary residence is exempt from property tax.
An applicant or married couple can apply for the exemption on only one property. That property must be his or her primary residence. Married couples and individuals who apply for the exemption on multiple properties cannot claim the property tax exemption.
In any case, the qualifying resident must have owned and lived in the home for at least ten years.
Colorado Gas Taxes
Gasoline: Gasoline is taxed in Colorado at 22 cents per gallon, but the state also imposes an additional road usage fee of 3 cents.
Diesel: 20.5 cents per gallon (plus 6 cents for the road usage fee)
Colorado Tobacco and Alcohol Taxes
Cigarettes: Cigarettes in Colorado are taxed at $1.94 per pack; additional local taxes may also apply. (A proposal would raise the cost of a pack of cigarettes to $2.24 in 2024 and then to $2.64 in 2027.)
All other tobacco products: 50% of the manufacturer’s list price.
Vapor products: 0% of the manufacturer’s list price effective January 1, 2023.
Beer: $0.08 per gallon
Wine: $0.28 per gallon
Liquor: $2.28 per gallon
Marijuana: For retail purchases of marijuana in Colorado, 15% state marijuana sales tax applies and a 15% excise tax, plus state and local sales taxes
Colorado Estate and Inheritance Tax
Colorado doesn’t have an estate or inheritance tax.