Colorado LLC Tax Filing: Rates & Forms (2026)

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

A Colorado LLC pays no separate entity-level income tax by default. Profits pass through to the members, who report them on the Colorado Individual Income Tax Return (Form DR 0104) at the state's flat 4.40% rate. Multi-member LLCs also file Form DR 0106, and an optional SALT Parity election lets the LLC pay the 4.40% tax at the entity level instead.

How a Colorado LLC Is Taxed

An LLC is a legal entity, not a federal tax classification, so "how a Colorado LLC is taxed" really means two questions layered on top of each other: how the IRS classifies the business federally, and how Colorado taxes the resulting income. In almost every case the federal answer flows into the state answer, because Colorado starts its income tax calculation from your federal taxable income. Colorado then applies a single flat 4.40% rate to that income, one of the simpler state regimes in the country.

Most Colorado LLCs are pass-through entities: the company files an informational return (or none at all, for a single-member LLC) and the actual income tax is paid by the members on their personal returns. A minority of LLCs elect to be taxed as corporations. This guide walks through the federal default, the S-corp election, Colorado's income tax forms, the SALT Parity entity-level election, sales tax, and payroll withholding. For the formation side, see how to form an LLC in Colorado and the national business tax hub.

Federal Default: Disregarded Entity or Partnership

By default the IRS does not treat an LLC as its own taxpayer. Under the federal "check-the-box" rules, a single-member LLC is a disregarded entity: its income, deductions, and credits are reported directly on the owner's Form 1040, usually on Schedule C for an active trade or business. A multi-member LLC is a partnership by default and files federal Form 1065, issuing each member a Schedule K-1 reporting their share of profit or loss.

Either way, the LLC itself pays no federal income tax; the members do. You need a federal Employer Identification Number (EIN) to file a partnership return, to hire employees, and generally to open a business bank account. A single-member LLC with no employees can sometimes use the owner's Social Security number, but most owners get an EIN to keep business and personal finances separate. See what an LLC is for how this pass-through treatment interacts with liability protection.

Self-Employment Tax and the S-Corp Election

Because default LLC income is not wages, active members pay self-employment tax of 15.3% (12.4% Social Security up to the annual wage base, plus 2.9% Medicare) on their share of the net earnings, in addition to income tax. That self-employment tax is a federal obligation, not a Colorado one, but it is often the largest single tax an owner-operator pays. Our self-employment tax explainer and SE tax calculator break down the numbers.

To reduce self-employment tax, some profitable LLCs elect to be taxed as an S corporation by filing IRS Form 2553. As an S corp, the owner takes a reasonable salary (subject to payroll tax) and can take remaining profit as distributions that are not subject to self-employment tax. This only makes sense once profit comfortably exceeds a reasonable salary, because it adds payroll filings and costs. Compare the trade-offs in S-corp vs LLC, LLC vs S-corp tax, and Form 2553 explained. An S-corp election also changes your Colorado filing: the LLC then files Form DR 0106 as an S corporation.

Colorado Income Tax on Pass-Through Income (Form DR 0104)

Colorado imposes a flat 4.40% individual income tax, so every dollar of LLC profit that passes through to a member is taxed at the same 4.40% rate regardless of the member's total income. Colorado begins with your federal taxable income and applies state-specific additions and subtractions, which keeps the calculation closely tied to your federal return. Individual members report their share of LLC income on Form DR 0104, the Colorado Individual Income Tax Return.

Members who expect to owe more than a small amount of Colorado tax that is not covered by withholding generally must make quarterly estimated payments using Form DR 0104EP, on roughly the same April, June, September, and January schedule as federal estimates. See quarterly estimated taxes for how to size those payments, and how to file business taxes for the federal-to-state workflow.

The Colorado Partnership & S-Corp Return (Form DR 0106)

A multi-member LLC taxed as a partnership, and any LLC that has elected S-corporation status, files Form DR 0106, the Colorado Partnership and S Corporation Income Tax Return. DR 0106 is primarily an informational return that reports the entity's income and each member's share, mirroring the federal Form 1065 or 1120-S. The LLC issues each member a Colorado K-1 (Form DR 0106K) showing the income they must include on their personal DR 0104.

DR 0106 also handles nonresident members. When an LLC has members who do not live in Colorado but earn Colorado-source income, the entity generally must either file a composite return and pay 4.40% on the nonresidents' shares, or collect a signed agreement that each nonresident will file their own Colorado return. An LLC that has elected to be taxed as a C corporation does not use DR 0106 - it files the corporate return, Form DR 0112, and pays the 4.40% corporate income tax at the entity level, after which distributions to members are taxed again on their personal returns (the classic double taxation).

The Colorado Pass-Through Entity Tax Election

Colorado's SALT Parity Act lets a partnership or S corporation - including an LLC taxed as either - elect to pay Colorado income tax at the entity level rather than passing all of it to the members. The entity pays the flat 4.40% tax on the members' distributive shares, and the members then subtract that income on their own returns so it is not taxed twice at the state level.

The point of the election is federal: the entity-level state tax is a deductible business expense, which effectively works around the $10,000 cap on the individual state-and-local-tax (SALT) deduction that applies on Schedule A. The election is made annually on Form DR 0106, and estimated entity-level payments use Form DR 0106EP. Whether it helps depends on each member's federal situation, so it is worth modeling with a tax professional. It does not change the 4.40% rate - only who writes the check to Colorado. See the business tax hub for the broader pass-through picture.

Colorado Sales and Use Tax

If your LLC sells taxable goods or certain services in Colorado, it must register for a sales tax license with the Colorado Department of Revenue before making sales. The standard two-year state retail license costs $16 plus a refundable $50 deposit that is returned after you have collected a set amount of state sales tax. You apply using the CR 0100 business application and then file and remit sales tax through Revenue Online, typically on Form DR 0100.

The Colorado state sales tax rate is 2.9%, but Colorado is a heavily "home rule" state: cities, counties, and special districts add their own rates, and some home-rule cities administer and collect their own sales tax separately from the state. As a result your combined rate and filing obligations depend on exactly where you sell. There is no general statewide business license in Colorado, but local and professional licenses are common - see business license in Colorado and the national business license guide.

Wage Withholding and Employer Accounts

If your Colorado LLC has employees, it must register for a wage withholding account with the Department of Revenue, withhold Colorado income tax from paychecks, and remit it on a schedule based on your withholding volume. You register through the same CR 0100 application used for sales tax. Separately, the LLC must handle federal payroll taxes and register with the Colorado Department of Labor and Employment for state unemployment insurance.

If your LLC elects S-corporation treatment, the owner-employee's reasonable salary runs through this same payroll and withholding system, which is part of why the S-corp election adds administrative cost. A default single-member LLC with no employees generally has no Colorado withholding obligation, because the owner's profit is not wages. For the federal side of payroll and estimated tax, see how to file business taxes.

Colorado LLC Tax Forms and Due Dates

The table below summarizes the main Colorado tax forms an LLC may touch, by how it is classified. All income tax forms use the same flat 4.40% rate. Confirm current forms and any rate adjustments on the Colorado Department of Revenue website before filing, because Colorado occasionally applies temporary rate reductions through its TABOR surplus mechanism.

Colorado grants an automatic six-month extension to file (to October 15 for calendar-year filers), but it is an extension of time to file, not to pay: any tax owed is still due by the original April 15 date, and paying late triggers penalty and interest. Keep your Colorado Periodic Report current too, since tax good standing and Secretary of State good standing are tracked separately.

Frequently Asked Questions

How is a Colorado LLC taxed?

By default the LLC itself is not taxed federally. A single-member LLC is disregarded and a multi-member LLC is a partnership, so profit passes through to the members. Colorado then taxes that income at its flat 4.40% rate on each member's Form DR 0104.

What is the Colorado income tax rate for an LLC?

Colorado uses a single flat rate of 4.40% for both individuals and corporations. Pass-through LLC income is taxed at the 4.40% individual rate on the members' returns.

What tax form does a Colorado LLC file?

A single-member LLC reports on the owner's DR 0104. A multi-member LLC or an S-corp LLC files DR 0106 and issues Colorado K-1s. An LLC taxed as a C corporation files DR 0112. See 1120 vs 1120-S vs 1065 for the federal counterparts.

What is the Colorado SALT Parity election?

It lets a partnership or S corporation, including an LLC, pay Colorado's 4.40% income tax at the entity level on Form DR 0106, giving members a federal deduction that works around the $10,000 SALT cap.

Does a Colorado LLC need a sales tax license?

Yes, if it sells taxable goods or services. The two-year state retail license costs $16 plus a refundable $50 deposit, and the state sales tax rate is 2.9% before local add-ons.

When are Colorado LLC taxes due?

April 15 for calendar-year DR 0104 and DR 0106 filers. Colorado adds an automatic six-month filing extension to October 15, but tax owed must still be paid by April 15.

Related

• Business tax (cluster hub)
• How to form an LLC in Colorado
• How much does a Colorado LLC cost?
• Colorado operating agreement
• Colorado registered agent requirements
• Colorado Periodic Report
• S-corp vs LLC
• Self-employment tax
• How to dissolve an LLC in Colorado

Sources

1. Colorado Department of Revenue - Individual Income Tax (flat 4.40% rate; Form DR 0104).
2. Colorado Department of Revenue - Partnership & S Corporation Income Tax (Form DR 0106; Colorado K-1).
3. Colorado Department of Revenue - SALT Parity Act (entity-level pass-through election).
4. Colorado Department of Revenue - Corporate Income Tax (Form DR 0112; 4.40% corporate rate).
5. Colorado Department of Revenue - Sales Tax (2.9% state rate; home-rule localities).
6. Colorado Department of Revenue - How to Apply for a Sales Tax License ($16 two-year license; $50 deposit; CR 0100).
7. Colorado Department of Revenue - Withholding Tax (employer wage withholding registration).
8. Colorado Department of Revenue - Individual Estimated Income Tax (Form DR 0104EP).
9. Colorado Revised Statutes - Title 39, Taxation (state income and sales tax framework).
10. IRS - Limited Liability Company (LLC) (federal default classification).
11. IRS - Single Member Limited Liability Companies (disregarded entity).
12. IRS - Self-Employment Tax (15.3% rate).
13. IRS - About Form 2553 (S corporation election).
14. Legal Information Institute - 26 CFR § 301.7701-3, Entity classification election.

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Tax laws, rates, and forms change; verify current requirements with the Colorado Department of Revenue and the IRS before filing.