Motor carrier taxes - Colorado

Property/Ad valorem taxes

In place of property taxes, Colorado citizens pay the Specific Ownership Tax (SOT) on their vehicles. The SOT rate goes up to 2.10 percent and is determined by the age and class of the vehicle. For Class A vehicles (interstate commercial carriers), the SOT is due no later than January 1st of each year and is collected by the Department of Revenue. The SOT for the remaining vehicle classes is collected by counties at the time the vehicle is registered by the owner each year. Fleet owners may pay the tax in installments, and car rental agencies may collect the SOT equivalent of two percent of the rental payment from renters.

Sales & use taxes

A 2.9 percent sales tax is imposed by Colorado on the purchase of motor vehicles and trailers within the state and to be registered in Colorado, unless the vehicle is being purchased to be moved and licensed outside of the state. Some cities, towns, or counties within Colorado may assess additional sales and use taxes of their own.

If a vehicle is brought in from another state to be licensed in Colorado, any sales or use tax paid in the other state will be taken into consideration when the vehicle is registered. If sales tax comparable to the amount due Colorado, has been paid out-of-state, there will be no additional sales tax due, but if the out-of-state paid sales tax was less than that due to Colorado, the carrier will be required to pay the difference when registering the vehicle.

The storage or use of a new or used trailer, semitrailer, truck, truck tractor, or truck body is exempt from sales tax if the vehicle has been relocated within Colorado, was used in interstate commerce, and the owner can provide evidence of the vehicle being previously registered in another state for at least six months.

Refunds of sales/use tax may be available for commercial vehicles used in interstate commerce.

Other

Special mobile machinery

Colorado assesses an ownership tax on special mobile machinery. The method in which the tax is assessed depends on the weight of the mounted equipment, whether it is operated by the same engine that propels the vehicle (PTO), and the model years of the equipment and the vehicle.

International Registration Plan (IRP) participants must register special mobile machinery separately from the vehicle.

If the equipment is registered separately from the vehicle, then after paying the tax, operators must carry a copy of Form 301, Movable Equipment Certification of Ad Valorem Taxation, with the vehicle and equipment.

Low emitting heavy vehicles (LEV)

Motor vehicles greater than 26,000 pounds gross motor vehicle weight rating (GVWR) that are certified by the Federal Environmental Protection Agency (EPA), as provided in the federal heavy-duty national program that includes the greenhouse gas emissions standards, are exempt from the state sales and use tax. Parts used for converting motor vehicles greater than 26,000 pounds GVWR are also exempt from state sales and use tax.

Motor vehicles greater than 10,000 pounds GVWR are also exempt from state sales and use tax if certain conditions are met, which includes meeting an emission standard equal to or more stringent than the low-emitting vehicle (LEV) standard.

Local taxes may still be due unless a city, county, or special district has adopted an exemption for LEV heavy vehicles.

Enterprise zone tax credits

Special tax incentives are offered to certain businesses in Colorado's economically distressed areas, referred to as “enterprise zones.” To qualify for the tax credit, the claimant must be certified by the Colorado Economic Development Commission.