What Is the Colorado Retail Delivery Fee?

The Colorado Retail Delivery Fee is a charge imposed on certain deliveries made by motor vehicle to locations within Colorado. This fee began on July 1, 2022. It applies to transactions where tangible personal property or taxable services are delivered to an end-user in the state. Retailers are responsible for collecting this fee from customers and remitting it to the state.

Understanding the Fee

The Colorado Retail Delivery Fee is a state-imposed charge, distinct from a sales tax. It is levied on the customer, not the retailer, although retailers are mandated to collect it at the point of sale. The fee applies once per transaction, regardless of the number of items purchased or how many separate shipments are used to deliver the goods.

The primary purpose of this fee is to fund various transportation infrastructure projects across Colorado. This includes initiatives aimed at improving roads, bridges, and other components of the state’s transportation system. As of July 1, 2024, the fee is $0.29 per retail delivery. It is important to note that this amount can adjust annually for inflation, with new rates typically published by April 15 for the upcoming fiscal year.

When the Fee Applies

The Colorado Retail Delivery Fee applies to any retail sale of tangible personal property or taxable services delivered by motor vehicle to a location in Colorado. This includes deliveries made by the retailer, a third-party delivery service, or the United States Postal Service. The fee is triggered if at least one item in the transaction is subject to Colorado sales or use tax.

The fee applies to online purchases shipped to a Colorado address, grocery deliveries, and third-party food delivery services. Even if a transaction involves multiple items, only a single fee is charged per retail delivery, not per item. This means a customer buying several taxable goods in one online order will incur only one delivery fee for that entire purchase.

The fee also applies to business-to-business (B2B) retail sales, provided they meet the criteria of containing at least one taxable item delivered by motor vehicle to an end-user in Colorado.

Exemptions from the Fee

Certain situations and types of transactions are exempt from the Colorado Retail Delivery Fee. If every item within a retail sale is exempt from Colorado sales tax, then the delivery itself is also exempt from the retail delivery fee. This includes, for instance, certain groceries that are not subject to sales tax.

Deliveries where the purchaser picks up the tangible personal property directly at the retailer’s business location are not subject to the fee, as no motor vehicle delivery to a Colorado address by the retailer or a third party occurs. Similarly, wholesale sales made to licensed retailers for the purpose of resale are exempt from the fee.

Additionally, deliveries made entirely without the use of a motor vehicle, such as those exclusively by bicycle or electric scooter, are exempt. A notable exemption also exists for small businesses: retailers with $500,000 or less in total retail sales in Colorado during the prior calendar year are not required to collect the fee. This exemption covers new businesses until they exceed this sales threshold.

How the Fee Appears and is Used

The Colorado Retail Delivery Fee is required to be displayed as a separate line item on customer receipts or invoices. Retailers must label this charge clearly as “retail delivery fees.” This ensures transparency for the consumer regarding the additional charge.

Retailers are responsible for collecting the fee from customers and then remitting these collected funds to the Colorado Department of Revenue. The remittance of the fee typically follows the same schedule as sales tax returns. The funds collected from the retail delivery fee are dedicated to enhancing Colorado’s transportation infrastructure. These revenues support various projects, including road maintenance, bridge repairs, and improvements to public transit systems across the state.