- From 1 January 2027, Colorado will impose state sales and use tax on computer software regardless of delivery method, including SaaS, downloads, and mobile apps.
- Two exemptions remain at the state level: custom software and software under a negotiated, individually signed licence agreement; standard click-through/boilerplate terms do not qualify.
- The local tax treatment is uneven because about 70 home-rule cities control their own software tax rules; some already tax SaaS (for example Denver, Boulder, Aurora), while others exempt it, so the same subscription can be taxed differently depending on the customer’s city.
- State-collected local taxes (including counties, special districts, RTD, and SCFD) do not automatically follow the new rule, so local tax may lag unless each jurisdiction adopts the change, potentially requiring voter approval under TABOR.
- Sourcing and filing remain unclear for multi-city SaaS use: Colorado sources to where the buyer receives the product, but no SaaS-specific sourcing rules have been issued, and some cities require separate local filings outside the state SUTS system.
Source: vatit.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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