Colorado sits in the center of the USA, leaning slightly west. Bordered by seven other states and crossed by the Rocky Mountains, it has a mean elevation of more than 2,000 meters, making this state of almost 270,000 km² the highest in the country. Nearly three million people live in the Denver metro area around the capital, more than half of the state's total population of almost six million (as of 2024).
International companies from around the world have chosen Colorado as a destination for foreign direct investment. One of the main reasons is surely its strategic location, which brings many advantages. Colorado sits at the center of a cross formed by Canada and Mexico to the north and south and Tokyo and Frankfurt to the east and west. Then there is the Mountain Time Zone, which makes business communication possible throughout the day. In short, it is ideally placed for communicating with and serving markets worldwide.
Ten Fortune 500 companies have their headquarters in the "Centennial State". Many other global players have made Colorado their North American home, including Kärcher, Partners Group and Pilatus.
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Economic freedom
Compared with cities on the East and West Coasts, Colorado stands out for its low cost of doing business. The state also offers many performance-based incentives. The Fraser Institute ranks Colorado second in the nation for economic freedom, and the "Centennial State" takes an excellent third place for labor market freedom. It earns another second place in the Pacific Research Institute's ranking of relative litigation burdens on jobs and businesses.
A central hub in a global network
Colorado's transportation and infrastructure are exceptional. Denver International Airport is not only a world-class airport but also one of the busiest in the world by annual passenger numbers.
The "Centennial State" is a nationally important junction for Interstate Highways I-25, I-70 and I-76. BNSF Railway and Union Pacific Railroad operate a network spanning thousands of kilometers of track.
Transportation and infrastructure are a major catalyst for the local economy. Businesses can take full advantage of these outstanding conditions and reach customers worldwide with ease.
A first-class education system
Colorado consistently tops the rankings for job and economic growth and is recognized as one of the best places for business in the USA. The quality of its workforce ranks right up there too.
Almost 40 percent of Coloradans hold at least a bachelor's degree, the second-highest rate in the nation. Residents also enjoy excellent access to top universities and training programs, as well as to federal institutions in science, research and technology.
Ideal living conditions with 300 days of sunshine a year help explain why so many students make Colorado their new home. Colorado ranks among the "Best States to Live", and Boulder even takes first place nationally in the city ranking (US News and World Report, 2021). Graduates join a talent pool that is among the best in the country and known for inspiring creativity and drive.
With its business-friendly environment, highly skilled workforce and wide range of advanced industries, Colorado gives you a solid foundation for business success.
Income tax in Colorado
Colorado levies an income tax of 4.4% (as of tax year 2025). On top of that, federal income taxes apply.
Corporate tax in Colorado
Colorado levies a corporate tax of 4.4% (as of tax year 2025). On top of that, federal corporate tax applies.
Sales tax in Colorado
The USA has no VAT on the European model. Instead, states, counties and municipalities levy a local sales tax on the sale of goods (but not services).
Sales tax rate in Colorado
Colorado's state sales tax is 2.9%. Cities and counties levy an average of 4.75% in sales tax, for an average combined rate of 7.65%.
Colorado nexus laws & sales tax
Learn more about economic nexus laws and sales tax.
Effective date:
December 1, 2018
Included transactions:
Retail sales of tangible personal property, goods or services delivered into the state count toward the threshold
Treatment of exempt sales:
Exempt sales and exempt services count toward the threshold, with the exception of wholesale
Trigger:
Before April 1, 2019: sales or transaction volume
As of April 1, 2019: only sales
Sales/transaction threshold:
Before April 1, 2019: $100,000 or 200 transactions
As of April 1, 2019: $100,000 (the transaction threshold was eliminated)
Evaluation period:
The threshold applies to the previous or current calendar year
Additional information:
- Out-of-state sellers must also collect and remit applicable local and special district sales taxes that are state-administered. Sellers making sales into home-rule cities where the state does not administer sales tax should contact those cities directly to learn about their requirements.
- In-state sellers that do not meet the state's economic nexus threshold should source sales based on their location. Colorado businesses that meet the economic threshold must use destination sourcing for all sales within 90 days of reaching the threshold.
- Registration requirements: Colorado requires a remote business to register and collect Colorado sales tax by the first day of the first month that begins at least 90 days after it exceeds the threshold. You can find more information in the Sales Tax Guide (page 11).
- HB19-1240
- Colorado Department of Revenue
Colorado marketplace sellers & sales tax
Learn more about registration requirements for marketplace sellers
Effective date for marketplace facilitators:
October 1, 2019
Economic nexus threshold:
At least $100,000 in Colorado retail sales in the current or previous calendar year. When calculating the threshold:
- Remote sellers should exclude sales made through a marketplace
- Marketplace facilitators should include all sales through the platform
Registration requirements:
- Remote multichannel sellers: Once you exceed the economic nexus threshold, you must register and collect Colorado use tax on sales not taxed by a marketplace facilitator.
- Remote marketplace sellers: You may not need to register with the state if you exceed the economic nexus threshold. Contact the Colorado Department of Revenue (DOR) for more information.
- In-state multichannel sellers: You must register with the Colorado DOR and collect tax on sales not taxed by a marketplace facilitator.
- In-state marketplace sellers: You must register. Contact the Colorado DOR for more information.
- Home-rule jurisdictions (cities that administer their own sales tax) may have different requirements.
- Learn more here.
Find more state profiles in our overview of all US states. Which state is right for your company? Our guide Which US state is best for your company? explains. And how to run a US LLC with no US presence completely tax-free is shown by our sister site zerotax.llc.
Our services for Colorado:
If Colorado is to become your market, it starts with the right structure. Under US company formation you will find legal forms and states of incorporation with prices; in a consultation we work out which of them fits you.