Is SaaS Taxable in Colorado? 2025 Guide
At state level, no. At local level, maybe. Colorado state does not tax SaaS. However, Colorado has 70+ home-rule cities that administer their own taxes—and some, like Denver, do tax SaaS.
Quick Reference
The Home-Rule Problem
This is the most complex state for SaaS tax compliance. Colorado has over 70 home-rule cities that set their own tax rules, thresholds, and definitions. You cannot simply "register for Colorado"—you may need to register with each city separately.
What "Home-Rule" Means
Home-rule cities in Colorado have constitutional authority to administer their own sales taxes. This means:
- Each city can define "taxable" differently
- Each city has its own registration process
- Each city has its own filing requirements
- Each city may have different nexus thresholds
Denver Taxes SaaS
Denver specifically taxes "computer software" including SaaS. If you have customers in Denver and meet Denver's nexus threshold ($500,000), you need to collect Denver sales tax on SaaS sales.
Other home-rule cities that may tax SaaS include Boulder, Aurora, and Colorado Springs. Each has its own rules.
State-Level Exemption
At the state level (Colorado DOR), SaaS is exempt. State-administered localities follow the state rule. But home-rule cities don't have to.
How Companies Handle This
Given the complexity, most SaaS companies:
- Use tax automation software (Avalara, TaxJar) that handles address-level tax calculation and multi-jurisdiction filing
- Register only in major cities where they have significant customer concentration (Denver, Boulder, etc.)
- Monitor the SUTS system (Sales & Use Tax Simplification) for cities that have opted in to simplified filing
SUTS: A Partial Solution
Colorado created SUTS (Sales & Use Tax Simplification System) to reduce compliance burden. Participating localities can be filed through a single portal. However, not all home-rule cities participate.
Check Your Colorado Exposure
Colorado complexity means you need to know your customer concentration by city. Our analysis flags Colorado as conditional.
Start Free AnalysisRegistration
Colorado registration is complex. You may need to register at multiple levels:
- State: Colorado DOR (for state-administered localities)
- Denver: Separate registration with Denver
- Other home-rule cities: Each requires separate registration
- Timeline: State: 1-2 weeks. Each home-rule city: additional 1-4 weeks each. Denver: separate registration required.
Recommendation: If you have significant Colorado sales, consult a tax professional or use automation software designed for multi-jurisdiction compliance.
Sources
- State Statute: C.R.S. §39-26-104 (Exemptions)
- State Guidance: Colorado DOR Sales Tax Basics
- FYI Sales 47 (Computer Software)
- Denver Tax Guide (separate from state)
- Colorado Municipal League home-rule resources
- SUTS (Sales & Use Tax System) for participating localities
- Last Verified: 2025-12-21