Colorado use tax is a 2.9% state tax on tangible personal property you store, use, or consume in Colorado when the seller didn’t collect Colorado sales tax at checkout. The obligation lands on you, the buyer. Counties, cities, and special districts add their own use taxes on top of the state rate, so the total you owe depends on the address where the property ends up.1Colorado Department of Revenue – Taxation. Consumer Use Tax Guide
When You Owe Colorado Use Tax
The tax is triggered whenever you acquire tangible personal property and Colorado sales tax wasn’t collected, or wasn’t collected in full, at the time of sale. The common situations are buying from an out-of-state retailer that doesn’t collect Colorado tax, buying items while traveling in a state with a lower rate, and pulling inventory off a business shelf for personal use instead of selling it to a customer.1Colorado Department of Revenue – Taxation. Consumer Use Tax Guide
The taxable event is tied to where you first use or store the property in Colorado, not where you bought it. Order equipment from a vendor in a no-sales-tax state and you owe use tax the moment those items arrive at your Colorado address. Buy furniture on vacation and have it shipped home, same rule.2Colorado Department of Revenue. Consumer Use Tax
Since October 1, 2019, marketplace facilitators like Amazon, eBay, and Etsy have been required to collect Colorado sales tax for their third-party sellers, and any out-of-state retailer with more than $100,000 in Colorado sales in the current or prior calendar year must also register and collect.3Department of Revenue – Taxation. Out-of-State Businesses Most large online purchases already have Colorado tax built into the checkout price. Use tax now catches the leftovers: smaller vendors below that $100,000 threshold, private-party sales, and in-person purchases you make while out of state. A non-collecting seller is required by Colorado law to notify you that use tax is owed.
What Rate You Actually Pay
The state rate is 2.9%, the same as Colorado’s state sales tax rate.4Department of Revenue – Taxation. Sales Tax Guide That’s rarely the full amount. Counties, cities, and special districts such as the Regional Transportation District layer their own use taxes on top, and the combined rate can shift noticeably from one side of a county line to the other.
To find your combined rate, look up your address in the Department of Revenue’s DR 1002 publication, which lists current sales and use tax rates for every jurisdiction in the state, then add the state, county, city, and any special district rates that apply.5Colorado Department of Revenue – Taxation. DR 1002 – Colorado Sales/Use Tax Rates Publication
Roughly 70 home-rule cities in Colorado administer their own sales and use taxes independently of the state. Denver, Colorado Springs, Aurora, and Boulder are among them. If your property is stored or used in a home-rule city, you may need to file a separate return directly with that city’s finance department in addition to the state filing. Contact information for each self-collecting city is published in the DR 1002.4Department of Revenue – Taxation. Sales Tax Guide
Credit for Tax Paid to Another State
Colorado won’t tax you twice on the same purchase. If you already paid sales tax to another state, you can subtract that amount from what Colorado is owed at your combined rate. Pay 2% elsewhere on an item that would carry a 4.9% combined Colorado rate, and you owe the remaining 2.9%. If the other state’s tax equals or exceeds your Colorado combined rate, you owe nothing more. Keep receipts showing the tax paid, because you’ll need them to claim the credit.
Common Exemptions
Colorado’s use tax exemptions largely mirror its sales tax exemptions. Federal, state, and local government agencies are exempt on their own purchases. Charitable organizations recognized under IRC Section 501(c)(3) that hold a Colorado Certificate of Exemption are exempt on purchases tied to their regular charitable functions; the Department of Revenue makes its own determination on qualification even when the IRS has already issued a 501(c)(3) letter.6Colorado Department of Revenue – Taxation. Charities and Nonprofit Organizations7Legal Information Institute. Colorado Code 39-26-718 – Charitable and Other Exempt Organizations
Property bought for resale isn’t subject to use tax, since sales tax gets collected when the item finally reaches a customer. The exemption ends the moment a retailer pulls an item out of inventory for personal or business use; use tax is then owed on the item’s purchase price.4Department of Revenue – Taxation. Sales Tax Guide
Manufacturing machinery and agricultural equipment carry their own exemptions with specific dollar thresholds and use conditions attached.8Colorado Department of Revenue. Sales and Use Tax Topics – Manufacturing9Colorado Department of Revenue. Sales and Use Tax Topics – Agriculture One caveat that trips people up: state-level exemptions don’t automatically apply in self-collecting home-rule cities. A nonprofit exempt at the state level should still confirm its status with the local municipality.
How to File and Pay
Individuals have three ways to report consumer use tax, and businesses follow a different schedule.
With Your Income Tax Return
The easiest option for most individuals is to attach the Consumer Use Tax Reporting Schedule (DR 0104US) to your Colorado Individual Income Tax Return (DR 0104). Everything gets calculated and paid at once, on the same April 15 deadline as your income taxes.10Colorado Department of Revenue. Consumer Use Tax Filing Information If you only make occasional untaxed purchases in a year, that’s usually the way to go.
On a Standalone Return
You can also file Form DR 0252, the Consumer Use Tax Return, on paper or through Revenue Online. For individuals, the return and payment are due by April 15 of the year following the purchases.11Colorado Department of Revenue. Consumer Use Tax Return Instructions Revenue Online produces immediate confirmation and processes faster than paper.12Colorado Department of Revenue – Taxation. DR 0252 – Consumer Use Tax Return The portal walks you through the purchase entries and credits for tax paid elsewhere; no separate login is required.13Colorado Department of Revenue. Consumer Use Tax – How to File Online
Business Deadlines Are Different
Businesses don’t wait until April. If a business’s cumulative consumer use tax stays under $300 for the whole year, the return is due by January 20 of the following year. If the cumulative tax owed passes $300 at the end of any month, the business must file and pay by the 20th of the next month.11Colorado Department of Revenue. Consumer Use Tax Return Instructions That $300 threshold is easy to cross mid-year if you don’t track purchases as they happen.
Buying a Vehicle Out of State
Vehicles are the most common use tax situation Colorado residents actually run into, and they don’t go on Form DR 0252. When you title and register a vehicle bought out of state or through a private sale, the county clerk’s office collects the use tax at the DMV based on the purchase price and your local combined rate. No separate return is needed.
If you already paid sales tax to the state where you bought the vehicle, you can credit that amount against what Colorado charges. Bring documentation to the DMV. You’ll owe only the difference between what you paid and what Colorado wants at your local rate.
Penalties for Filing Late
Missing the deadline triggers both a penalty and interest. The penalty is the greater of $15 or 10% of the unpaid tax, plus an additional 0.5% for each month the tax stays unpaid, capped at 18% total.14FindLaw. Colorado Revised Statutes Title 39 Taxation 39-26-204 Interest runs on top of the penalty from the original due date. For 2026, Colorado’s annual interest rate is 8% at the discounted rate and 11% at the regular rate.15Department of Revenue – Taxation. Tax Topics – Penalties and Interest
If you find that prior periods went unfiled, you can file amended returns on paper by checking the amended return box on Form DR 0252. Each period needs its own amended return with all corrected lines, not just the changes.
Records to Keep
For each untaxed purchase, save the invoice or receipt showing the purchase price, the date the item arrived in Colorado, any sales tax paid to another state, and the delivery address that fixes your local tax rate. The DR 1002 confirms the combined rate for that address.5Colorado Department of Revenue – Taxation. DR 1002 – Colorado Sales/Use Tax Rates Publication Businesses with frequent untaxed purchases should track use tax monthly rather than reconstructing a year of records in January.