Buying a car in Colorado

Every figure below is sourced to Colorado’s own revenue or motor vehicle publications and dated. Estimates only.

Colorado at a glance

State sales tax
2.9%
Local tax is added on top in most states — treat this as a floor.
Trade-in credit
Reduces your tax
You are taxed on the price less your trade-in allowance.
Dealer doc fee
Not confirmed
We have not confirmed a cap for this state, so we do not claim one.
Title and registration
$7.20
$7.20 title.

Colorado taxes the car every year, not just at purchase

A recurring annual tax on the vehicle’s value applies here — assessed at 85% of value at a representative 2.1% rate. It never appears in a monthly payment and is easy to miss when comparing states.Colorado's Specific Ownership Tax, levied annually at registration in place of a property tax. Two caveats. (1) 2.10% is the YEAR-ONE rate; it steps down with age — 2.10%, 1.50%, 1.20%, 0.90%, then 0.45% for years 5-9, and a flat $3 from the tenth model year. Applying 2.10% flat later materially overstates it. (2) The 85% ratio applies to passenger vehicles (Class C) against original MSRP, which is fixed at the year of manufacture and does not change with ownership or age; Class A and B vehicles under 16,000 lb use 75% instead. Rates are statutory under s. 42-3-107, C.R.S., not locally set, though revenue is distributed to counties, cities, school districts and special districts.

Local tax in Colorado

NO COMBINED RATE CAN BE STATED FOR COLORADO. The 2.9% state rate is overlaid by county, city and special-district taxes, and critically, home-rule cities that administer their own local sales and use taxes are 'self-collected': they set their own rules about what is taxable, and the Department of Revenue's guidance expressly does not apply to them. DOR directs taxpayers to contact self-collecting home-rule cities directly (the list is in DR 1002). Such a city may therefore treat a vehicle sale, and even the trade-in allowance, differently from the state.