Colorado imposes no franchise tax, though businesses may owe corporate income, sales, and other state taxes. Under C.R.S. § 39-22-301(1), the state taxes C corporations on net income only.

The good news for corporate filers is that Colorado's corporate income tax is a flat 4.4% on C corporations. That rate holds on the 2025 corporate return and the 2026 estimated tax worksheet. No TABOR rate cut applies for 2026, since the Legislative Council Staff's June 2026 forecast projects revenue growth below the threshold needed to trigger an automatic reduction; 2024's one-time 4.25% rate under SB24-228 was the exception.

LLCs, S corporations, and partnerships pass profits through to owners' returns; an LLC follows its federal classification. Owners pay Colorado's flat 4.4% rate, per the individual income tax FAQ. Partnerships and S corporations file DR 0106; eligible pass-throughs may elect entity-level tax under the SALT Parity Act election.

Overview of Colorado's business tax landscape

Colorado has no franchise tax, but your other tax obligations depend on entity type and sales location.

• Business income tax: 4.4% on Colorado-source net income for C corporations; S corporations and partnerships are generally not taxed at the entity level absent a SALT Parity election

• Sales and use tax: 2.9% state rate, per the sales tax guide

• Economic nexus: out-of-state sellers need a Colorado sales tax license once current-year retail sales into the state pass $100,000. Collection starts the first day of the first month beginning at least 90 days after that. If prior-year sales passed $100,000, the requirement applies for the whole calendar year.

• Other taxes: property, withholding, excise and fuel, fiduciary income, and severance, among others

Colorado's 4.4% corporate income tax rate stays below the rates in Nebraska and New Mexico through tax year 2026.

Nebraska's rates come from Nebraska statute 77-2734.02; its 2025 figure is also confirmed in the 2025 corporation tax booklet. New Mexico's rates come from HB 252 (2025) and SB 141 (2026).

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Frequently asked questions about Colorado franchise tax information

Does Colorado have a franchise tax?

No. Colorado taxes net income only, and the Department of Revenue lists no franchise tax category. The Secretary of State's tax information FAQ confirms that tax questions fall outside that office's role and belong with the Department of Revenue or a tax advisor.

What does the Colorado Secretary of State charge instead of a franchise tax?

Filing fees only: $25 for the periodic report, $50 late penalty, and $100 for a Statement Curing Delinquency, per the SOS fee schedule effective July 1, 2024.

Do LLCs pay Colorado's corporate income tax?

No, not directly. LLCs are pass-through entities that follow their federal tax classification, so profits generally flow to the owners' individual returns and are taxed at Colorado's flat 4.4% rate. LLCs taxed as C corporations for federal purposes are the exception and would owe the 4.4% corporate rate instead.

Does Colorado's corporate income tax rate change every year?

It can. The 4.4% rate has been held for 2025 and 2026, but Colorado's TABOR law can trigger automatic rate reductions in years when state revenue growth exceeds a set threshold, as it did for a one-time cut in 2024. Confirm the current rate against the Colorado Department of Revenue's forms each filing year.