Understanding your Colorado franchise tax obligations

Colorado doesn't have a traditional franchise tax, but foreign and domestic businesses may need to pay corporate income tax, pass-through taxation, sales tax, and other business-related taxes.

The main business tax in Colorado is corporate income tax, which applies a flat rate to C corporations. For LLCs, S corporations, and partnerships, Colorado uses pass-through taxation where profits flow to owners' personal tax returns.

Overview of Colorado's business tax landscape

While there is no Colorado franchise tax, you may carry other tax obligations depending on your Colorado business structure and how you operate in the state. You may owe:

• Business income tax: paid by entities that also must file federal income tax returns
• Sales and use tax: applies to entities making sales in the state of Colorado
• Other taxes: may include property, withholding, excise & fuel, or severance taxes

The good news is that Colorado's business tax rates are more favorable than many neighboring states. The 4.4% corporate tax rate beats Nebraska's (between 5.58% and 7.25% depending on your income) and New Mexico's (5.9% as of 2025).

Discern manages Secretary of State filings in 51 jurisdictions

Colorado’s business taxes require careful attention and a knowledgeable tax professional. 

While Discern can't help you with your taxes in Colorado, we can help with your multistate annual reports and serve as your Colorado registered agent. Setup only takes a few minutes.