Chapter 25 - § 25.5 • LOCAL OCCUPATION TAXES

• Jurisdiction: Colorado

§ 25.5 • LOCAL OCCUPATION TAXES

While local governmental entities are prohibited from imposing income taxes in Colorado, some municipalities impose occupation taxes for the privilege of operating a business or for the privilege of engaging in an occupation or profession within the municipality.¹³⁰ These occupation taxes include so-called "head taxes" imposed by certain home rule cities, which are imposed at a flat rate per month based on the number of employees of the business who work within the city during the month.¹³¹ The employees' share of the head taxes usually must be withheld by employers and paid to the taxing jurisdiction.

Other occupation taxes are imposed on specific types of businesses that operate within the local taxing jurisdiction. These taxes are usually measured by some element that takes into account the amount of business conducted in the taxing jurisdiction. Taxes that are measured by income (net or gross), however, violate the prohibition on the imposition of local income taxes in Colorado.¹³²

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Notes:

^[130] Statutory authority to impose occupation taxes is found at C.R.S. § 31-15-501(1)(c).

^[131] See, e.g., Denver Rev...