State & Local Tax Information
In this section...
Income Tax
- Corporate Income Tax: Colorado's corporate income tax rate is a flat 4.63 percent assessed on Colorado net income, defined as the corporation's federal taxable income, with some modifications.
- Individual Income Tax: Colorado assesses a flat tax of 4.63 percent of an individual's taxable federal income. Most small businesses are either S Corporations, partnerships or sole proprietorships, so these companies pay the individual rate for their business taxes.
Business Property Taxes
Legislation passed in 2008 increases Colorado's business personal property tax exemption to $7,000 over five years. From the tax year beginning Jan. 1, 2015, onward, the exemption will be increased biennially to account for inflation. Business real property is taxed at a standard 29 percent assessment rate, with the exception of producing mines and oil and gas leaseholds and lands (as described in the Property tax table below).
Personal property (machinery and equipment) used in commercial and industrial operations is also assessed at 29 percent of actual value, based on replacement cost, expected economic life of the asset and other factors. Business personal property with an economic life of one year or less, or with acquisition cost of $250 or less, is exempt from taxation. Computer and telecommunications equipment have accelerated depreciation schedules and reduced residual values.
Unemployment Insurance
Colorado's unemployment insurance rates vary among employers, depending upon the history of taxes and benefits paid, and the Unemployment Insurance Fund balance. The majority of new employers are charged a tax based on a combination of three separate factors, including:
- Beginning base rate (1.7 percent)
- Annually computed surtax (currently .22 percent)
- Solvency tax surcharge (1.2 percent)
- Resulting in combined rate of 3.12 percent on the first $10,000 of each employee’s calendar year earning.
New employers' rates change during the first three years of operations until they are "experience rated" on payroll data and the number of Unemployment Insurance claims. Employers in construction-related businesses may be subject to a different tax base rate.
Worker's compensation insurance is purchased through private insurance companies in Colorado. The Colorado Legislature created Pinnacol Assurance, a nonprofit insurance carrier, to sell worker's compensation insurance.
Property Tax
Colorado property taxes have three main components:
- The actual value of property, which is established by local assessors along with the property's classification (residential, commercial, or personal).
- The assessed value of property, which is based on the assessment rate, which is determined by the Colorado Legislature. The assessment rate for commercial and industrial property is set at 29 percent of market value. The residential rate is adjusted every odd-numbered year in order to maintain a balance between the tax burden on residential and all other properties. The residential assessment rate is 7.96 percent for 2012 assessments.
- The mill levy, which is determined by the local taxing entities and varies by the location of a property. The average mill levy in Boulder County was 88.50 per $1,000 of assessed value in 2012.
| Property Class | Assessment Rate & Method |
|---|---|
| Residential (fluctuates from year-to-year) | 7.96% |
| Commercial, Industrial, Personal, Vacant Land, or State Assessed Property | 29% |
| Mixed-Use | 7.96% for residential proportion, 29% for commercial |
| Oil and Gas Leaseholds and Lands (Primary Production) | 87.5% of oil or gas sold or transported from premises, with modifications |
| Oil and Gas Leaseholds and Lands (Secondary Production) | 75% of oil or gas sold or transported from premises, with modifications |
| Exempt Property | Assessed at appropriate rate, but not taxed |
Sales and Use Tax
Information on the City of Boulder Sales and Use taxes can be found here: https://bouldercolorado.gov/tax-license/sales-and-use-tax
Colorado Tax Credit Incentives
The State of Colorado and City of Boulder offer various tax credit incentive programs to companies creating new jobs and investment in the state and city.