| Business
Costs - Taxes |
| |
| |
 |
Sales/Use
Tax |
|
|
| |
Retail Sales
Tax
Businesses selling tangible personal property at retail in
Colorado are required to collect and remit sales and use tax.
Effective January 1, 2001, the state sales tax rate was reduced
from 3 percent to 2.9 percent. Certain jurisdictions
are allowed to add up to 4 percent additional local sales
tax by public referendum. In addition, there is a 0.6 percent
Regional Transportation District (RTD) sales tax, a 0.1
percent Cultural Facilities District (CD) tax and 0.1
percent Football Stadium District (FD) tax added in most
areas of the metro region. Combined state and local sales
tax rates in the metropolitan Denver area range from 3.7 percent
to 8.15 percent .
Use Tax
Use tax is imposed on the storage, use or 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.
The storage, use, or consumption of machinery or machine
tools for manufacturing which are exempt from the sales
tax is also exempt for the use tax.
Sales and Use Tax
Exemptions
Sales to manufacturing or processing plants or ingredients
used in final products including industrial power and fuel
are exempt from the state sales and use tax. All purchases
of machinery or machine tools for manufacturing are currently
exempt from sales and use taxes.
Other retail sales tax exemptions include: certain farm
commodities, motor fuels, cigarettes, newspapers, groceries,
sales to governmental units, sales to new or used trucks
or trailers for use outside Colorado, sales of cars to non-residents
for use outside Colorado, drugs by prescription, insulin
and injecting devices, eyeglasses, prosthetic and therapeutic
devices, wheelchairs and hospital beds, electricity and
fuel for residential use, and electric powered motor vehicles.
Regional
The RTD/CD/FD Tax
The Regional Transportation District (RTD) levies a sales/use
tax of 0.6 percent. The RTD includes the counties of Denver,
Boulder, Jefferson, Adams (west of Box Elder Creek), Arapahoe
(roughly, one mile east of Gun Club Road and south of Quincy
including Arapahoe Park), and Douglas (northeast portion
plus Highlands Ranch).
A sales/use tax of 0.1 percent applies to all sales that
are subject to the RTD tax for the Scientific and Cultural
Facilities District.
A sales/use tax of 0.1 percent applies to all sales that
are subject to the RTD tax for the Football Stadium District.
The RTD/CD/FD tax is imposed on all transactions that are
subject to state sales and use tax. Exception: RTD/CD/FD
tax is imposed upon machinery and machine tools even when
those items are exempt from state sales tax.
Local
All Colorado cities that have enacted a "home rule"
charter, and which have elected to administer their own
local sales and use taxes, are referred to as "self
collected" or "self administered." Self-administered
jurisdictions have the right to establish their own regulations
regarding those goods and services upon which to impose
their local sales and use taxes, and must be contacted directly
for that information.
| Sales
taxes collected by Home Rule Cities within Jefferson
County |
| |
Local
|
Total
with State and RTD/CD/FD |
| Arvada |
3.46% |
8.06% |
| Edgewater |
3.5% |
8.1% |
| Golden |
3.0% |
7.6% |
| Lakeside |
2.1% |
6.7% |
| Lakewood |
3.0% |
7.6% |
| Morrison |
3.0% |
7.6% |
| Mountain View |
4.0% |
8.6% |
| Westminster |
3.85% |
8.45% |
| Wheat Ridge |
3.0% |
7.6% |
Local Improvement District Tax
A sales tax of 0.5 percent within designated areas
of southeast Jefferson County and Boulder County (Old Town
Niwot and Cottonwood Square) is collected. Exemptions include
utilities, telephone, and telegraph services. A service fee
of 3 1/3 percent is allowed for southeast Jefferson County.
Boulder County does not allow a service fee.
Other Sales Taxes Collected
Jefferson County (Open Space) 0.5 percent |
|
|
Corporate
Income Tax |
|
|
| |
Colorado’s income tax rate is a flat
4.63 percent of Colorado net income, defined as the corporation’s
federal taxable income, with some modifications.
This corporate income tax rate is among the lowest in the
nation. Corporate income taxes were lowered twice during the
past two years from 5 percent to 4.75 percent to the present
4.63 percent tax.
State method of apportioning
income
Colorado is unique among states in that two alternative apportionment
formulas have been adopted which allow the taxpayer to choose
the method that produces the lesser tax liability. The taxpayer
can make a decision annually on whether to use the standard
three-factor formula or a special two-factor formula.
The three-factor formula averages the corporation’s wages,
property, and sales in Colorado and compares that average
to total wages, property, and sales to determine what proportion
of its profits will be taxed.
The two-factor formula averages property and sales in Colorado
only, and compares that average to the total property and
sales. |
| |
|
Personal
Income Tax |
|
|
| |
The state income tax rate
for resident individuals, estates, and trusts is 4.63 percent
of Colorado taxable income. To find the Colorado taxable
income, use the following computation:
| Federal
Taxable Income |
| Plus |
(+) |
Any state income tax included in federal
itemized deductions |
| Plus |
(+) |
Non-Colorado state & municipal bond
interest |
| Plus |
(+) |
Lump sum distributions from pension
or profit-sharing plan not included in federal taxable
income
|
| Minus |
(-) |
State income tax refunds included in
federal taxable income |
| Minus |
(-) |
Interest on obligations of the United
States |
| Minus |
(-) |
Previously taxed PERA or School District
#1 benefits |
| Minus |
(-) |
Pension exclusion of up to $20,000 if
age 55 or older |
| Minus |
(-) |
Colorado Source Capital Gain |
| Equals |
(=) |
Colorado Taxable
Income
|
Allowable credits include taxes paid to other states, earned
income credit and childcare/child tax credit for full-year
and part-year residents.
|
| |
|
Property
Tax |
|
|
| |
All real and business personal property,
except that which is specifically exempt by law, is subject
to property taxation by local districts. A general reassessment
of all property in Colorado occurs every two years. For
2001 and 2001 assessments, a property’s market value
is determined from sales and other data during the period
between July 1, 1998, and June 30, 2000. The assessment
rate for commercial and industrial property is set at 29
percent of market value, while the residential rate is adjusted
during years of general reappraisal. The residential assessment
rate is 9.15 percent for 2001 and 2002 assessments. The
average mill levy in the Jefferson County is 99 mills.
State Tax Refund for Businesses
During the years of state budget surplus, taxpayers who
paid $500 or less in business personal property tax will
receive a refund of the full amount of personal property
tax paid. Effective July 1, 2001, taxpayers who paid more
than $500 will receive $500 plus 16 percent of the amount
paid over $500.
Determination of Tax Rates
Where you live within a county determines the taxing entities
to which you will pay your taxes.
| Residential
Example |
| Mrs. Jones’ home is
provided services by four taxing entities. The market
value of her home is $150,000. Her total tax bill
is determined to be $1385.03. |
| County tax rate: |
2.4686 percent or 24.686
mills |
| City tax rate: |
.8750 percent or 8.75 mills
|
| School district tax rate: |
5.1761 percent or 51.761
mills |
| Water and sanitation tax
rate: |
.0960 percent or 9.6 mills |
| Total tax rate: |
9.480 percent or 94.80
mills
|
| $150,000 (Actual Value)
x 9.15 percent (Assessment Percentage) x .09480 (Tax
Rate) = $1,301.13 (tax bill) |
| Business
Example |
| XYZ manufacturing owns a $10 million
building including land. |
$10,000,000 (Actual Value) x 29 percent
(Assessment Percentage)
x .09480 (Tax Rate) = $274,920 |
Corporate Personal Property Tax
Rebates
Under SB182, Colorado allows municipalities to rebate the
corporate personal property tax at 50 percent for four years.
Companies interested in applying for this incentive must
contact JEC to
request an application.
|
| |
|
Unemployment
Compensation Rate |
|
|
| |
State unemployment insurance rates vary among established
employers, depending upon the history of taxes and benefits
paid, and the Unemployment Insurance Fund balance. The majority
of new employers are charged the beginning base tax rate of
1.7 percent plus an annually computed surtax, currently at
.22 percent. A solvency tax surcharge of 1.2 percent also
exists, resulting in a combined rate of 3.12 percent on the
first $10,000 of each employee’s calendar year earnings.
If you have further questions, contact the Unemployment Insurance
Tax Branch
(303) 603-8231 or 1-800-480-8299 or the Colorado
Department of Labor and Employment-Unemployment Taxes web
site. |
| |
|
Worker's
Compensation Insurance |
|
|
| |
Worker’s compensation insurance
is purchased through private insurance companies in Colorado.
There is not a state fund.
The Colorado Legislature created Pinnacol, a non-profit
insurance carrier, to sell worker’s compensation insurance.
It is not, however, a state agency. Pinnacol can be reached
by calling 303-782-2241 or 888-852-2241.
Businesses are encouraged to shop for the best rates and
service as they would for any other form of insurance.
The Colorado Division of Workers' Compensation offers services
to help insurance companies, medical providers, attorneys,
employers, and employees comply with the provisions of the
Workers' Compensation Act. They may be contacted at 888.390.7936.
Mor information is available on their website,
as well.
|
| |
