A tax system that rewards investment in Colorado

Colorado provides a competitive tax structure that rewards investments and business innovation. All levels of government recognize the importance of providing citizens services and infrastructure while maintaining a fair and equitable tax structure.

Colorado ranked No. 2 for economic outlook in the 2010 ALEC-Laffer State Economic Competitiveness Index, which evaluated the link between states’ policies and economic performance. States that perform well on the index tend to have low regulatory and tax burdens and a sustainable approach to public spending.

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.

• Multistate corporations with operations in Colorado are taxed using single-factor apportionment. This approach allows companies to pay taxes based solely on their sales in the state.

Individual Income Tax - Colorado has a flat individual income tax structure. The income tax rate for all residents is 4.63 percent of Colorado taxable income.

Retail Sales Tax - The Colorado state sales tax rate is 2.9 percent. Certain jurisdictions may add up to 4.15 percent additional local sales tax by public referendum. Most areas of the metro region also add a one percent Regional Transportation District sales tax, a 0.1 percent Cultural Facilities District tax, and a 0.1 percent Football Stadium District tax.

Property Tax - 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 to balance the tax burden on residential and all other properties. The residential assessment rate for the 2009 and 2010 tax years is 8.85 percent. The average mill levy in Metro Denver, which is the dollars of tax per $1,000 of assessed valuation, was 87.809 in 2008.

Business Personal Property - Legislation passed in 2008 increases Colorado’s business personal property tax exemption to $7,000 over five years. In the 2015 tax year and beyond, the exemption will increase biennially to account for inflation.

Unemployment Insurance Tax - Colorado unemployment insurance tax rates for established employers vary depending on the history of taxes and benefits paid and the overall Unemployment Insurance Fund balance. The tax rate is a combination of three separate factors: the base rate, an annually computed surtax, and a solvency tax surcharge. For the majority of new employers in calendar year 2010, the beginning base tax rate is 0.017, the surtax is 0.0022, and the solvency surcharge is 0.006. This amounts to a combined rate of 0.0252 on the first $10,000 of each employee’s annual earnings.

Occupational Tax - Five cities in Metro Denver assess an occupational tax on employees whose salaries meet certain thresholds. The employer and the employee share the occupational tax.

For more detailed tax information, visit www.metrodenver.org.

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