Colorado State Taxes
Quick Tax Facts
Income Tax: 4.4%
State Sales Tax: 2.9% 
Median Property Tax: $2,233
Overview
Colorado’s natural beauty and laid-back lifestyle are a draw for many prospective residents. It’s also one of many states where recreational marijuana is legal – though retail purchases are taxed at 15%. And while housing prices have soared across the state, its property tax rates are still fairly low compared to the rest of the county. Overall, Colorado is ranked among the top 10 states with the lowest tax burden.
Colorado Income Tax
Since 1987, Colorado has used a flat tax rate applied universally to all income brackets. It is one of only nine states that still has a flat tax. Of the states that do have a flat tax, rates range from 3.07% (Pennsylvania) to 5.25% (North Carolina). For the 2026 tax year, Colorado’s tax rate is 4.4%
Who Must File?
According to the Colorado Department of Revenue, you must file a Colorado income tax return if any of the following are true:
- You are a full-year resident of the state, or
- A part-year resident who earned taxable income while residing in the state, or
- A non-resident with a Colorado income source,
AND
- You are required to file a federal income tax return, or
- You have Colorado income tax liability for the year.
Colorado taxpayers with higher taxable incomes may also be required to pay a state alternative minimum tax (AMT). The AMT is payable only to the extent that it exceeds the regular state income tax.
Colorado Sales Tax
Colorado has a state sales tax rate of 2.9%. Cities, counties, and special districts may also impose additional sales taxes of up to 8%. The average local sales tax is 4.87% and the combined average (state and local) is 7.78%. Winter Park has the highest combined sales tax rate at 11.2%. There are several cities with a combined rate of 2.9%, which is the lowest.
Other local government organizations may also collect local sales taxes, such as school districts. Additionally, certain purchases may be also subject to special sales taxes that can be as high as 11.25%. Groceries and prescription drugs are exempt from sales taxes.
Colorado Property Taxes
Colorado property taxes are levied at the local level and all revenue stays within the county. The amount you pay is based on your home’s assessed value (market value x residential assessment rate = assessed value) and the local total tax rate. For 2026, the assessment rate for a residential single-family or multi-family home is 6.25%.
For example, if your single-family home has a market value of $300,000, the assessed value is approximately $18,750 ($300,000 x .0625 = $18,750).
To determine your tax, multiply the assessed value by the local tax rate (assessed value x tax rate = taxes). Local tax rates are expressed in mills, which are equal to $1 for $1,000 of property value. If a county has a tax rate of 8.5%, your property tax bill would be approximately $1,593.75 ($18,750 x .085 = $1,593.75).
The median property tax bill in Colorado is $2,233. Pitkin County has the highest average tax bill at $4,030, while Prowers County has the lowest at $435.
| Highest | $4030 |
|---|---|
| Median | $2233 |
| Lowest | $435 |
Yearly Cost Per Resident
Colorado Tax Holidays
There are no tax holidays scheduled in Colorado at this time.
Colorado Tax Relief
Owing Colorado income taxes can feel overwhelming, but you’re not alone. Whether your tax debt resulted from financial hardship, missed tax filings, or business-related tax issues, failing to address it can lead to additional penalties, interest charges, and collection actions by the Colorado Department of Revenue. Acting sooner rather than later can give you access to more options for resolving your tax debt.
Fortunately, Colorado provides several tax relief solutions for eligible taxpayers. Depending on your financial situation, you may qualify for a payment plan, an Offer in Compromise, or other programs designed to help you resolve your balance. Taking proactive steps can help you avoid more serious collection efforts, such as tax liens, bank levies, wage garnishments, and other enforcement actions.
Learning how Colorado collects unpaid taxes and understanding the relief options available can help you make informed decisions, protect your finances, and work toward putting your tax problems behind you.
Common Colorado State Tax Problems
Back Taxes
If you owe unpaid Colorado taxes, addressing your balance early may help you avoid additional penalties and collection actions.
Unfiled Tax Returns
Filing past-due Colorado tax returns is often the first step toward resolving your state tax issues.
Tax Notices
Notices from the CO Department of Revenue shouldn’t be ignored, as they often require prompt action to prevent further collections.
Liens & Levies
Unresolved tax debt may lead to liens against your property or levies on your assets as the state works to collect what is owed.
Garnishment
Colorado may garnish your wages to collect unpaid taxes, reducing the amount of each paycheck you receive.
Tax Penalties
Unpaid taxes can continue to accrue penalties and interest until your balance is resolved.
How Colorado Collects Tax Debt
If you don’t pay your Colorado income taxes on time, the Department of Revenue will send a Notice of Deficiency that gives you 30 days to pay or protest the amount.
Should your balance remain unpaid, or the notices go unanswered, the state will send out a Final Determination demanding immediate payment or requesting you set up a payment plan. Should you ignore that as well, the state will file a lien and send your account to collections.
Because penalties and interest continue to accrue until the balance is paid, addressing your tax debt as early as possible can help you avoid additional costs and more serious collection actions.
Notice of Deficiency sent to taxpayer
Final Determination and lien filed
If not paid, account sent to collections
Colorado State Tax Relief Options
Colorado offers several tax relief options, including:
- Income Tax Payment Plans – Colorado offers a standard payment plan for individuals that allows them to pay their balance over 36 months or less. Those facing financial hardship may request an extended plan. You can apply online or by phone (303-205-8291). Businesses needing a payment plan can call 303-866-3711.
- Penalty Abatement – Individuals may be eligible for penalty abatement for reasonable cause. Waivers are approved on a case-by-case basis.
- Offer in Compromise – Colorado does not unilaterally enter into or offer an Offer in Compromise (OIC). It may consider an OIC request by mail if you’ve been approved for one by the IRS. To request an OIC review, you’ll need copies of your IRS Form 656 and Collection Information Statement, as well as your IRS transcript. You will also need to complete Colorado Form DR 6596 and DR 3023, and include a written statement detailing why you warrant an OIC.
If you’re experiencing financial hardship and can’t pay your Colorado income tax bill, contact the Colorado Taxpayer Helpline immediately to discuss payment options and potential alternatives to collection actions.
When to Seek Tax Relief Help
If you’re experiencing any of the following, it may be time to explore your tax relief options:
You’re Receiving Collection Notices
Ignoring Colorado tax notices can lead to more serious collection actions, so it’s often best to address the issue early.
You Can’t Afford to Pay Your Taxes
If paying your Colorado state tax bill in full isn’t realistic, there may be payment or resolution options available.
Collection Actions Have Started
If you’re facing wage garnishments, bank levies, or tax liens, professional guidance may help you understand your options.
The sooner you address your tax debt, the more options you may have available to resolve your balance and minimize additional collection actions.
Colorado Tax Relief FAQs
Colorado Tax Resources
If you need assistance preparing your Colorado state taxes, you can speak with a tax professional from Tax Defense Network by calling 855-476-6920.
You can also visit the Colorado Department of Revenue for additional resources.
- Colorado Income Tax Forms
- Payment Options
- Taxpayer Helpline: 303-238-7378 or DOR_TaxpayerService@state.co.us
- Where’s My Refund?
