Is food taxable in Colorado?

by Sarah Craig December 2, 2023

Please note: This blog was originally published in 2021. It’s since been updated for accuracy and comprehensiveness.

Food is a tricky category when it comes to sales tax, and states approach it in a variety of different ways. One of the things that makes it challenging is that it’s typically not viewed as a single category at all, but treated differently depending on whether it’s been prepared or packaged, for example. Some states even treat it differently depending on what temperature it is! We’ll walk you through when – and when not to – charge sales tax when selling food and beverages in Colorado.

Are groceries taxable in Colorado?

In Colorado, grocery items are exempt from state tax, though local areas can levy a tax.

Grocery items include:

Food purchased for human consumption at home
Seeds and plants which produce food for human consumption
Food purchased with food stamps or WIC vouchers

However, these common grocery items are fully taxable in Colorado:

Non-food items such as soaps, paper products and household supplies, grooming items and cosmetics, and food not for human consumption, such as pet food.
Alcoholic beverages (cooking wine, wine vinegar and alcohol-filled candies are exempt)
Cigarettes, tobacco and tobacco products.
Food preservation equipment and items.
Vitamins, dietary supplements, and medicines. (Prescription drugs are exempt)
Ice used for refrigeration

What about food you purchase from a vending machine? Here’s what the state has to say about that: “All sales and purchases of food through vending machines shall be exempt from Colorado state sales tax.”

However, the following items are not considered food by the state and would therefore be taxable:

Carbonated water marketed in containers
Soft drinks
Chewing gum
Candy
Prepared salads
Packaged and unpackaged cold sandwiches
Hot or cold beverages served in unsealed containers or cups that are vended by or through machines

Are meals taxable in Colorado?

Food furnished by restaurants or other eating establishments is fully taxable in the state of Colorado. This is where temperature comes in! Per the state, “Food to be eaten in the store, hot foods ready to eat and food marketed to be heated in the store” are fully taxable.

Are beverages taxable in Colorado?

Carbonated water marketed in containers and soft drinks are subject to the state sales tax. Prepared coffee and tea is also subject to sales tax, but coffee beans, grounds, or tea bags are considered grocery items and are therefore exempt from sales tax. Alcoholic beverages are also fully taxable.

How to always collect the correct amount of sales tax in Colorado

Do you sell groceries, meals or beverages? Are you required to collect sales tax in Colorado? Then this may sound like a huge headache.

That’s where TaxJar can help.

With the TaxJar API, you can be sure you’re collecting the right amount of sales tax on every transaction. Our product tax codes ensure you do collect sales tax on that soft drink but don’t collect sales tax on that plain coffee drink.

Not to mention, most e-commerce businesses have nexus in multiple states. For example, groceries are taxable in some states, but non-taxable in others. Or, like Illinois, they are taxable at a reduced rate. With TaxJar, you’ll collect the right amount of sales tax from every customer, in every state, every time.