Table of Contents

  1. State-Administered Local Tax Rate Changes
  2. Home Rule Jurisdiction Changes
  3. Impact on Businesses
  4. Additional Resources
Colorado state capitol building, where statewide sales and use tax laws are passed.

Colorado Sales & Use Tax Rate and Exemption Changes Effective 1/1/2026

Published: December 22nd, 2025

As we approach the new year, it’s essential for businesses in Colorado to stay informed about the upcoming changes in sales tax rates. The Colorado Department of Revenue has recently published the local sales and use tax changes that will take effect on January 1, 2026. Staying up to date with the latest sales tax rate changes is vital for businesses in Colorado. By understanding the changes and updating their sales tax rates accordingly, businesses can ensure compliance and avoid penalties. If you have any questions or concerns about the sales tax rate changes, please don’t hesitate to contact our sales and use tax firm for guidance and support.

The first major change is that the state of Colorado has removed the service fee allowance for state sales tax.

State-Administered Local Tax Rate Changes

The state-administered local tax rate changes include rate increases for several jurisdictions. Some of the notable changes include:

  1. Aspen: Sales tax increase to 2.70%

  2. Fort Morgan: Sales and use tax increase to 5.0%

  3. Merino: New Jurisdiction, sales and use tax rate 2.0%

  4. Pagosa Springs: New Jurisdiction, sales and use tax rate 1.0%

  5. Yuma: Sales and use tax increase to 3.75%

  6. Bould County: Sales and use tax increase to 1.335%

Aside from the sales and use tax rate increases, there are several changes to allowed exemptions, lodging tax rates and new special district tax jurisdictions that have been added. A comprehensive list of the changes can be found on the Colorado Department of Revenue’s website.

Home Rule Jurisdiction Changes

Home rules jurisdictions in Colorado have the authority to administer their own sales and use taxes. The following home rule jurisdictions have changed effective January 1, 2026:

  1. Cortez: Sales and use tax rate decreased to 3.85%

  2. Timnath: Sales and use tax rate increased to 4.25%

  3. Westminster: Sales and use tax rate increased to 4.25%

Changes to Self-collecting home-rule jurisdictions:

  • Gunnison will return to State Collected effective 1/1/2026

Impact on Businesses

These changes will impact businesses operating in the affected jurisdictions, and they must update their sales tax rates to ensure compliance. Failure to do so may result in penalties and fines. It’s crucial for businesses to review their sales tax obligations and make the necessary adjustments to avoid any potential issues.

Additional Resources

For a comprehensive list of tax rate changes, you can visit the Colorado Department of Revenue’s website and access the printable list of tax rate changes, found here.

A free state provided tool to check the sales tax rates for any Colorado address can be found at the Colorado sales tax lookup service.

Please let us know if we can help simplify your sales tax compliance. Contact us to schedule a free 30-minute consultation.