Motor vehicles are tangible personal property and are therefore subject to Colorado sales and use taxes. However, special rules apply to the taxation of motor vehicles in Colorado. Additionally, the manner in which a motor vehicle is taxed varies depending on whether it is leased or purchased.
The taxing requirements apply to motor vehicles that are subject to registration requirements in Colorado. These registration requirements apply to every self-propelled vehicle that is designed primarily for travel on public roads and is generally and commonly used to transport people or property. Cars, trucks, and motorcycles are all generally subject to these requirements.
This does not address the taxation of low-powered scooters, farm tractors, and any other vehicle that is not subject to vehicle registration requirements.
Motor vehicle sales in Colorado are subject to state and state-administered local sales and use taxes. Which local taxes apply depends on both the city, county, and special district(s) in which the vehicle will be registered, the purchaser’s residence, and the location of the sale.
In general, a motor vehicle sale is subject to all state and state-administered local sales taxes that apply to the location of the sale. For sales tax purposes, a motor vehicle sale generally takes place at the location the purchaser takes possession of the vehicle.
Sales Between Private Parties or at Auction
If the party selling a motor vehicle is not a dealer licensed by the Auto Industry Division, the seller may not be required to collect the state and state-administered sales taxes applicable to the sale. Additionally, an auctioneer who has not been licensed by the Auto Industry Division is not required to collect state and state-administered local sales taxes on motor vehicle sales, even if the auctioneer holds a sales tax license.
If the seller is not required to collect sales taxes, the purchaser generally must pay all applicable state and state-administered sales taxes to the County Clerk at the time of registration.
- State Sales Tax is currently 2.9%
- County Sales Tax is currently 2.5%
- Incorporated Towns vary