If you've ever stared at a crumpled receipt from a shop on 16th Street Mall and wondered why the math seems a little "off," you aren't alone. Taxes are rarely fun. In Denver, they're actually a bit of a jigsaw puzzle. Honestly, calling it just a "city tax" is a massive oversimplification.
By the time 2026 rolled around, the landscape for business owners and shoppers in the Mile High City shifted again. Basically, you're looking at a stack of different rates that all pile on top of each other.
The Breakdown: What is sales tax in denver colorado?
Right now, the total combined sales tax rate in Denver is 9.15%.
That number doesn't just come out of thin air. It’s a cocktail of four different jurisdictions wanting their cut. If you buy a $100 jacket, you aren't just giving the city money; you're paying the state, the transit district, and even the local museums.
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Here is how that 9.15% actually splits up:
- Colorado State Tax: 2.9%
- Denver City Tax: 5.15%
- RTD (Regional Transportation District): 1.0%
- CD (Cultural Facilities District): 0.1%
You might notice that Denver County doesn't add its own separate percentage. That's because the City and County of Denver are a consolidated government. They keep it simple—well, as simple as taxes can be.
Why does the rate keep changing?
You've probably heard people grumbling about how expensive it's getting to live here. In late 2024 and 2025, Denver voters faced a few big choices at the ballot box. There were serious pushes for Ballot Issue 2Q and 2R, which aimed to funnel more money into Denver Health and affordable housing. While the base rate stayed at 9.15% for many, some specific areas or proposals occasionally nudge that needle.
It’s also worth noting that Denver is a home-rule city. This is a huge deal for anyone running a business. Unlike "state-collected" cities where you just deal with the Colorado Department of Revenue, Denver plays by its own rules. They collect their own money. They have their own auditors. They even have their own definitions of what is and isn't taxable.
The Digital "Gotcha" and Software Taxes
One of the biggest headaches for Denver businesses lately involves things you can't even touch. If you’re buying or selling software-as-a-service (SaaS) or digital goods, things get murky.
Historically, Colorado was a bit of a "Wild West" for digital tax. But now? If you download a movie, stream music, or pay for a cloud-based subscription, Denver expects that 9.15%. They categorize these as "audio, visual, or audio-visual products."
Even "canned" software—the stuff that isn't custom-made for one specific person—is almost always taxable if it's delivered via a physical medium. However, Denver’s home-rule status means they often tax software that other parts of the state might ignore. It's a trap for out-of-state companies that think they only have to follow state-level 2.9% rules.
What's actually exempt? (The Good News)
Nobody wants to pay tax on everything. Thankfully, there are some "essential" items where you get a break.
- Groceries: Generally, the food you buy at the grocery store to cook at home is exempt from the 2.9% state tax. However—and this is a big "however"—Denver’s local tax might still apply to certain items.
- Prescription Drugs: If a doctor wrote you a script for it, you’re usually safe from the tax man. This includes insulin and related supplies.
- Medical Equipment: Durable medical equipment (think wheelchairs or oxygen tanks) often qualifies for exemptions.
- Coins and Bullion: As of early 2025, Colorado clarified that precious metal bullion and coins are exempt from state-administered taxes.
Keep in mind that "soda and candy" are usually treated like luxury items, not food. You'll pay the full 9.15% on that Snickers bar.
The 2026 "Vendor Fee" Shock
If you run a small business, you probably used to like the "vendor fee." It was basically a tiny "thank you" from the state. You got to keep a small percentage (usually around 4% of the state portion) to cover the cost of actually doing the paperwork.
That’s gone.
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Beginning January 1, 2026, Colorado eliminated the sales tax vendor fee. Now, you have to remit 100% of what you collect. For a massive retailer, it’s a rounding error. For a small boutique in the Highlands? It’s another bite out of the bottom line.
Delivery Fees: The 28-Cent Irritation
We have to talk about the Retail Delivery Fee. It’s that weird charge that shows up on your Amazon or DoorDash orders. For the period ending June 30, 2026, this fee is set at $0.28 per delivery.
It’s not technically a "sales tax," but it feels like one. It applies to any delivery by motor vehicle to a Colorado address that includes at least one item subject to state sales tax. If you’re a business owner, you can’t just lump this into your "shipping and handling" line. It has to be its own thing.
Remote Sellers and the $100,000 Rule
Do you sell stuff online but don't have an office in Colorado? You might still owe Denver money.
This is called "economic nexus." Basically, if your business does more than $100,000 in sales within Colorado during the current or previous year, you have to register and collect tax.
Denver is particularly aggressive about this. Since they are a home-rule city, you can't just register with the state and call it a day. You have to deal with the Denver Department of Finance directly unless you use the SUTS (Sales and Use Tax Simplification) system, which, frankly, every business should be using to stay sane.
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How to Stay Out of Trouble
The biggest mistake people make is "absorbing" the tax. In Denver, it is actually illegal to advertise that you will pay the sales tax for the customer. You can't say "Tax-Free Sunday!" or "We pay the tax!"
You have to list the tax as a separate line item on the invoice. If you don't, and you get audited, the city will assume the total price you charged didn't include tax, and then they'll bill you for 9.15% of your total gross sales. That is a quick way to go out of business.
Practical Steps for Business Owners
- Check your Address: Don't guess the rate based on a zip code. Zip codes in Denver often cross city lines. Use a tool like the Colorado "Look Up a Specific Rate" (GIS) map to find the exact rate for your specific front door.
- File Even if you Sold Nothing: If you have a license, you must file a return. Even if it’s $0. If you don't file, the city will "estimate" what they think you owe and send you a bill with a penalty. It's a nightmare to undo.
- Keep Receipts for 4 Years: Denver’s statute of limitations for audits is generally three years, but keeping four years of records is the "gold standard" for safety.
Managing Denver sales tax isn't just about math; it's about staying on top of the constant tweaks from the city council and state legislature. Whether you're buying a latte in LoDo or shipping software to a client in Cherry Creek, that 9.15% is the price of doing business in one of the fastest-growing cities in the country.
To ensure your business remains compliant, your next step is to log into the Denver Treasury Division’s e-Biz Tax portal to verify your account status and ensure your filing frequency matches your 2026 revenue projections.