Overview of Colorado Taxes
Colorado has low property taxes and a flat income tax rate of 4.63%. Colorado’s sales tax is the lowest in the country out of states with a sales tax, but county and city taxes mean Coloradoans can end up paying much more.
Number of Personal Exemptions
Your Income Taxes Breakdown
|Tax Type||Marginal |
|2018 Trump Taxes*|
|Total Income Taxes|
|Income After Taxes|
* These will be the taxes owed for the 2018 - 2019 filing season.
Under the Trump Tax Plan (2018-2019 filing season), your Federal Income Tax will be and your FICA will be .
Changes to Your Federal Income
Taxes Under the Trump Tax Plan
- Your marginal federal income tax rate will
- Your effective federal income tax rate will
- Your federal income taxes will
Total Estimated Tax Burden
Total Estimated Tax Burden $
Percent of income to taxes = %
- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Colorado state tax quick facts
The Centennial State has a flat income tax rate of 4.63%, and one of the lowest statewide sales taxes in the country, at just 2.9%. However, because of numerous additional county and city sales taxes, actual combined rates can be as high as 10.4%. When considering these local taxes, the average Colorado sales tax rate is almost 7.5%, 15th highest in the country.
On the other hand, homeowners in Colorado get a break: the state’s property taxes are among the nation’s lowest, with an average effective rate of just 0.60%. Below, we’ll take a look at each of these taxes individually, as well as one that you may not even be aware of.
Colorado Income Tax
The state income tax in Colorado is assessed at a flat rate of 4.63%, which means that everyone in Colorado pays that same rate, regardless of income level. There are seven other states with a flat income tax. Among these state’s Colorado’s rate ranks fourth lowest and is slightly above average.
When compared to states with a progressive income tax, Colorado’s rate is also close to the middle of the pack. As compared with other state’s top rates, 4.63% ranks as the 23rd lowest rate; however, when compared to other state’s bottom rates, it ranks as the 10th highest.
That 4.63% applies to Colorado taxable income, which is equal to federal taxable income (with one exception, described below). Therefore, taxpayers who do not itemize deductions on their federal income tax return do not have the option to do so on their state return, and taxpayers who do itemize deductions federally, must claim the same deductions on their state return. One exception is that taxpayers who make donations to charity, but do not itemize deductions on their federal return, may be able to deduct those donations on their Colorado state income taxes. If you are looking to get help filing your return, you can look into tax preparation software like TurboTax and H&R Block.
As mentioned, Colorado taxable income is equal to federal taxable income. The only exception is the deduction for state income taxes (also known as the SALT deduction). Taxpayers who itemize deductions federally, and claim this deduction, must add it back to their Colorado taxable income.
Colorado Tax Credits
After calculating their initial tax bill, there are some additional tax credits Coloradans can claim. The most significant of these are the Child Care Tax Credit (which is equal to a percentage of the federal credit by the same name), the Earned Income Credit (equal to 10% of the federal credit) and the Alternative Fuel Credit, which is available to taxpayers who purchase an alternative fuel vehicle such as a battery-powered electric car.
Colorado Sales Tax
The statewide sales tax in Colorado is just 2.9%, lowest among states with a sales tax. However, as anyone who has spent time in Denver, Boulder or Colorado Springs can tell you, actual sales tax rates are much higher in most cities. This is because many cities and counties have their own sales taxes in addition to the state sales tax. The table below shows sales tax rates for all counties and the largest cities in Colorado.
Sales Tax Rates (Updated October 2017)
|County||State Rate||County Rate||Total Sales Tax|
|City||State Rate||County + City Rate||Total Sales Tax|
|Aurora||2.90%||5.100%||8.000%||*Actual tax is 8.00%, 8.50% or 8.75% depending on location|
|Cherry Hills Village||2.90%||4.850%||7.750%|
|Erie||2.90%||3.500%||6.400%||*Actual tax is 6.40%, 7.40% or 8.485% depending on location|
|Westminster||2.90%||5.450%||8.350%||*Actual tax is 8.35% or 8.60% depending on location|
Property and tangible goods (including electronically delivered goods such as music downloads) are subject to sales tax in Colorado, but most services are not. While prepared food is taxable, most food that is purchased for consumption at home (i.e. groceries) is nontaxable. Prescription drugs are also tax-exempt in Colorado.
Colorado Property Tax
If you’re thinking about finally investing in that Rocky Mountain ski lodge, there’s some good news: Colorado has some of the lowest property taxes in the country. The state’s average effective property tax rate (property taxes paid as a percentage of home value) of 0.60% is the seventh lowest in the U.S. In some areas, effective property taxes are even lower. In Gilpin County, for example, where homeowners there pay about $760 annually in property taxes, the rate is just 0.30%. And before purchasing your new chalet, you’ll want to take a look at our Colorado mortgage guide to get a full understanding of the mortgage market in the Centennial State.
Calculate Your Property Taxes: Colorado Property Tax Calculator
Colorado Marijuana Tax
As of 2014, marijuana is both legal and taxable in Colorado. In fact, the marijuana tax rate is 30% across the state. That tax rate includes a 15% excise tax on marijuana and a 15% retail marijuana sales tax. The state sales tax rate also applies so the total tax you pay is 32.9% plus any additional local sales taxes.
Colorado Estate Tax
There is no estate or inheritance tax in Colorado.
Colorado Capital Gains Tax
Most capital gains in Colorado are taxed at the standard income tax rate of 4.63%. However, certain long-term gains are exempt. Gains from property acquired after May 9, 1994, which was held for at least five years before being sold, may be exempt up to a limit of $100,000.
Colorado Gas Tax
The gas tax in Colorado is 22.0 cents per gallon of regular gas, 12th lowest in the country. Diesel fuel is taxed at a rate of 20.5 cents per gallon.
Photo credit: flickr
Places with the Lowest Tax Burden
Are you curious how your tax burden stacks up against others in your state? SmartAsset’s interactive map highlights the counties with the lowest tax burden. Scroll over any county in the state to learn about taxes in that specific area.
Where you live can have a big impact on both which types of taxes you have to pay each year and how much money you spend on them. SmartAsset calculated the amount of money a specific person would pay in income, sales, property and fuel taxes in each county in the country and ranked the lowest to highest tax burden.
To better compare income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes.
In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a county by the household income less income tax. This product is then multiplied by 35% to estimate the sales tax paid.
For property taxes, we compared the median property taxes paid in each county.
For fuel taxes, we first distributed statewide vehicle miles traveled down to the county level using the number of vehicles in each county. We then calculated the total number of licensed drivers within each county. The countywide miles were then distributed amongst the licensed drivers in the county, which gave us the miles driven per licensed driver. Using the nationwide average fuel economy, we calculated the average gallons of gas used per driver in each county and multiplied that by the fuel tax.
We then added the dollar amount for income, sales, property and fuel taxes to rank the counties to calculate a total tax burden.