Breckenridge Real Estate Blog

Colorado provides a competitive tax structure that rewards investments and business innovation. Colorado ranked 37th in per capita state government spending in 2005. It also placed 14th in combined state, and local taxes, and federal taxes as a percentage of income.

On November 1, 2005, Coloradans voted on investing in Colorado’s future, without raising taxes. Referendum C allows the state to retain excess tax revenues and permits the state to spend those revenues on K-12 public education; healthcare, public higher education, and transportation projects.

Corporate:
Every corporation, domestic and foreign, located in or “doing business” in Colorado, is subject to corporate income tax. For income tax years commencing on or after January 1, 2000, the tax rate is 4.63 percent of Colorado taxable income.

State:
Colorado offers businesses the choice to calculate their state tax liability on the basis of the standard three-factor formula (revenue, property, and payroll), or a two-factor formula (revenue and property), whichever is less. Only domestic operations and income are included in the apportionment formulas. Colorado is a “water’s edge” unitary tax state.

Personal:
In 1987, the Colorado Legislature adopted a “flat tax” structure that greatly simplifies the determination of Colorado income tax liability. The individual income tax rate for tax years commencing on or after January 1, 2000 is 4.63 percent of Colorado taxable income. When comparing tax revenues relative to personal income, Colorado places 48th among the 50 states for state level taxes.

Sales:
Effective January 1, 2001, the Colorado sales tax rate was reduced from 3 percent to 2.9 percent. Certain jurisdictions are allowed to add up to 4.15 percent additional local sales tax by public referendum. In addition, there is 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. Combined state and local sales tax in Metro Denver ranges from 3.15 percent to 8.85 percent.

Property:
The assessment rate for commercial and industrial property in Colorado is set at 29 percent of market value, while the residential rate is adjusted every two years during reappraisal years. The residential assessment rate is 7.96 percent for 2006.

Unemployment Insurance Tax:
State unemployment insurance rates vary among established employers, depending upon the history of taxes and benefits paid, and the Unemployment Insurance Fund balance. The tax rate is a combination of three separate factors including the base rate, an annually computed surtax, and a solvency tax surcharge. Employers in construction related businesses may be subject to a different tax base rate.

Occupational Tax:
Five cities in Metro Denver assess an occupational tax on all persons that work in that city who earn at least a certain monthly salary. The occupational tax is shared by the employer and the employee.