Merchant Services in Colorado
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What a Colorado business needs to know before taking card payments: the state sales tax rate, what the law says about card surcharges, and what it costs to form an LLC. Every figure below comes from an official Colorado page or statute and links to it. Checked 2026-10-15.
Colorado at a glance
| Item | What we found | Source |
|---|---|---|
| State sales tax base rate | 2.9% | Official source |
| Card surcharge rule | Allowed with limits | Official source |
| LLC formation fee | $50.00 | Official source |
| LLC recurring fee | $25.00 every year | Official source |
| Wage income tax | 4.4% flat | Official source |
Card surcharges in Colorado
What the statute says
Colorado's legislature summarizes Senate Bill 21-091: it repealed the prohibition and limits a surcharge to 2% of the transaction or the merchant discount fee the seller pays, with notice displayed on the premises or, for online purchases, before checkout. Visa also lists Colorado as having requirements.
Colorado caps a surcharge at the lower of 2% of the sale or your actual cost of accepting the card. On a $100 sale paid with a card that costs you $3.20, the state limit works out to $2.00.
Worked example: a $100 card sale
Using a published online card rate of 2.9% + $0.30 (Stripe, checked 2026-10-15), a $100 sale costs you $3.20 to process.
| Your card cost | $3.20 |
|---|---|
| Visa's limit for credit cards (lower of your cost or 3%) | $3.00 |
| Colorado's limit | $2.00 |
| Most you could add on this sale | $2.00 |
| Share of your card cost that covers | 63% |
Visa's own rule: Visa's Q&A says U.S. merchants may surcharge credit cards (not debit or prepaid) up to the merchant discount rate for the card or 3%, whichever is lower, must disclose it as a merchant fee at the point of entry, point of sale or checkout and on the receipt, and must notify their acquirer at least 30 days before starting.
This is arithmetic from published rules, not legal advice. Visa's rules apply to credit cards only (not debit or prepaid), require disclosure, and require notice to your processor before you start. Ask your processor before you surcharge.
See the surcharge laws for all states ·Try the surcharge calculator
Sales tax in Colorado
The state base rate is 2.9%, which we read on the official page (Colorado state sales tax is imposed at a rate of 2.9%.). That is the 1 lowest of the 46 states whose base rate we have verified. On a $100 purchase the state tax is $2.90; on a $1,250 purchase it is $36.25.
Local taxes may apply on top of the state rate, and the exact rate depends on the address.
Forming an LLC in Colorado
The state filing fee for an LLC is $50.00, which is the 4 lowest of the 48 states whose formation fee we have verified.
Online filing fee.
After that, Colorado charges $25.00 every year (periodic report), so the state fees in the first year are about $75.00.
Colorado filing office ·How to start an LLC
Paying employees in Colorado
Colorado taxes wages at a flat 4.4% (after its deductions and exemptions).
As a rough estimate, a single employee paid $2,000 every two weeks would have about $60.75 of Colorado income tax withheld per paycheck. This is an estimate and does not include credits or local taxes.
Rates per the Colorado revenue department's official 2026 page.
What this means for a Colorado business
A surcharge is possible in Colorado but it must stay within the limit above and be disclosed the way the law requires.
Frequently asked questions
Can I add a credit card surcharge in Colorado?
Yes, within limits. Colorado's legislature summarizes Senate Bill 21-091: it repealed the prohibition and limits a surcharge to 2% of the transaction or the merchant discount fee the seller pays, with notice displayed on the premises or, for online purchases, before checkout. Visa also lists Colorado as having requirements.
What is the sales tax in Colorado?
The state base rate is 2.9%. Local taxes may apply.
How much does it cost to form an LLC in Colorado?
The state filing fee is $50.00.
Other state pages
We publish a state page only when the sales tax rate, the LLC formation fee and the surcharge rule are all verified from official sources.