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January 30, 2022
Michael Collado is a car buying expert and has been a professional automotive writer since 2009. He’s written about dealership sales, vehicle reviews and comparisons, and service and maintenance for over 100 national automotive dealerships. Previously, Collado was a copywriter at the ad agency TBWA/Chiat/Day where he worked on brand campaigns for Nissan, ABC Television, Sony PlayStation, and Energizer. His recognition in the ad industry includes awards from Communication Arts and The Clios.
Collado has a Bachelor’s degree from the University of South Florida, with a major in Psychology and a minor in Marketing.
Are you planning to purchase a new or a used vehicle in the state of Colorado?
Here’s what you need to know about Colorado sales tax on vehicle purchases.
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The current sales tax in Colorado is 2.9%.
It's important to note, this does not include any local or county sales tax, which can go up to 8.3%, for a total sales tax rate of 11.2%. However, the average total tax rate in Colorado is 6.319%.
To calculate the sales tax on your vehicle, find the total sales tax fee for the city. The minimum is 2.9%. Multiply the vehicle price (after trade-ins but before incentives) by the sales tax fee.
For example, imagine you are purchasing a vehicle for $50,000 with the state sales tax of 2.9%. The trade-in value of your vehicle is $10,000 and you have a $1,000 incentive. The total taxable amount is $40,000 since trade-ins are not taxable, but incentives/rebates are.
In this example, multiply $40,000 by .029 to get $1,160, which makes the total purchase price, $40,160 (account for the incentive).
Calculate Car Sales Tax in Colorado Example:
- Initial Car Price: $50,000
- Sales Tax Rate: 2.9%
- Trade-In Amount: $10,000
- Incentive/Rebate Amount: $1,000
Sales Tax = ($50,000 - $10,000) * .029
Sales Tax = $1,160
Remember that the total amount you pay for a car (out the door price) not only includes sales tax, but also registration, and dealership fees.
The sales tax on a used car purchase is 2.9%, which is the same rate for new cars in Colorado.
The highest sales tax in Colorado is in Grand County, with Winter Park having the highest sales tax in the state. When you add the state sales tax with the Grand County sales tax, you will get a total of 11.2%.
The lowest sales tax in Colorado is in Baca County. When you add the state sales tax with the county sales tax, you will get a total of 4.9%.
However, some cities in Baca, Cheyenne, Kiowa, and Kit Carson Counties have the minimum state sales tax of 2.9%.
You do not have to pay a sale tax on the trade-in on your vehicle in the state of Colorado.
In other words, when calculating sales tax, be sure to subtract the trade-in amount from the car price.
Let’s say that you're purchasing a new car for $45,000 and your trade-in is valued at $5,000. This would put your new vehicle purchase price at $40,000, which is the taxable amount.
You will have to pay sales tax on any private car sales in Colorado. The rate is 2.9%.
For instance, if you purchase a vehicle from a private party for $20,000, then you will have to multiply that amount by .029 to get $580. That brings the total to $20,580.
The state of Colorado does tax rebates and dealer incentives.
In other words, do not subtract the incentive amount from the car price before calculating the sales tax amount.
As an example, let’s say you want to purchase a new truck for $35,000 and the dealer provides a $2,500 rebate. You still have to pay a sales tax on the $2,500 rebate. Therefore, the taxable amount is $35,000.
Colorado charges the following DMV and state fees:
Fees are based on the total weight of the vehicle.
Colorado dealerships may charge the following fees:
You can avoid paying sales tax on a car sale if you purchase the vehicle in a state with no sales tax and register it in Colorado.
Also, if the vehicle is sold in the state of Colorado but is going to be moved out of the state within 30 days.
Colorado residents are able to claim a $2,500 rebate, in addition to the federal tax credit, when they purchase an EV and register it with the state.
They can also claim up to $1,500 for a 2-year minimum lease.
Tax information and rates are subject to change, please be sure to verify with your local DMV.
The state sales tax on a vehicle purchase in the state of Colorado is 2.9%. This does not count the county and city taxes which will make the total purchase price higher.
Yes. You will have to pay a 2.9% sales tax on any used vehicle that is purchased and registered in the state of Colorado.
The county with the lowest sales tax in Colorado is Baca County. When you add the state sales tax with the county sales tax, you will get a total of 4.9%
The county with the highest sales tax in Colorado is Grand County. When you add the state sales tax with the county sales tax, you will get a total of 11.2%.
You do not have to pay tax on a gifted vehicle in Colorado.
Vehicle registration in Colorado is determined by the weight and the type of vehicle.
Yes. The value of a trade-in is not taxed. For instance, if you purchase a new truck for $45,000 and the value of your trade-in is $12,000, then you will only have to pay sales tax on the $33,000.
You can avoid paying sales tax in Colorado by having the vehicle gifted to you. Also, vehicles that are purchased out of state are exempt from sales tax in Colorado. Finally, you can avoid sales tax in Colorado if you purchase your vehicle in the state and transport it out of the state within 30 days.
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