Taxes

Corporate Income Tax

Rate: 4.75 %

Every corporation, domestic and foreign, which is located in or doing business in the state is subject to the corporate income tax. Small business which file under Subchapter S of the Internal Revenue Code, insurance companies subject to insurance tax, and others not subject to federal income tax are exempt from the Colorado corporate income tax. The corporate income tax rate is a flat 4.75 percent.

Corporate Income Tax Allocation Formulas
Colorado is unique among the states in offering businesses the choice of calculating their state tax liability on the basis of a two-factor formula (revenue and property) or on the basis of the standard three-formula (revenue, property, and payroll), whichever is less. The apportionment method can be changed annually.

Retail Sales Tax and Use Tax

Statewide Rate: 2.9%
City of Wray: 2.5%
City of Yuma: 3.0%
** Yuma County has no sales tax
Jurisdictions' Rates: Up to 4.0%
Sales Tax Exemptions: Various, including items used in agricultural operations, groceries, pharmaceuticals, and others

Use Tax
Use tax in imposed on the storage, use of consumption in Colorado of tangible personal property upon which a sales tax has not been paid. Use tax does not apply to property purchased for resale within the regular course of business. Yuma County has no use tax.

Individual Income Tax

Rate: 5.0 %

The Colorado income tax law adopts almost all provisions of the Federal Internal Revenue Code in the definition of gross income, deductions, and the criteria for determining allowable exemptions. In 1987, the Colorado Legislature adopted a "flat tax" structure that greatly simplified the determination of Colorado income tax liability. The individual income tax rate for Colorado is 4.75 percent of federal net taxable income.

Unemployment Insurance Tax

Rate: 1.7 %

State unemployment insurance rates vary among established employers, depending upon the history of taxes paid by an employer, benefits paid to former employees, and the Unemployment Insurance Fund balance. Colorado unemployment insurance tax is paid on the first $10,000 in gross wages paid to each employee in a calendar year. All new employers are charged a standard rate of 1.7 percent.

For further information on the tax rate for your business, please contact the Unemployment Insurance Tax Branch at (303)318-9100 or 1-800-480-8299.

Workers' Compensation Rates

Rates: Based on payroll and subject to industry type.

Premiums for workers' compensation insurance are based on the nature of the business, with each industry paying in relation to the likelihood injury. There are approximately 600 classification codes that best describes each business. Therefore, the classification is for the overall business, not the individual occupations or operations within that business. Premiums are based on each $100 unit of payroll. For rate information for your business, please contact the Colorado Compensation Insurance Authority at (303)782-4000 or 1-800-873-7242.

Tax and Spending Limitation (Tabor Amendment)

In 1992, this amendment to the State Constitution was voted on and passed. This amendment requires that all tax increases be voted on by the people and limits government spending to the increase in population plus inflation.

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