Do I Charge Sales Tax on Cottage Food or Catering in Colorado?

Cottage food in Colorado: no state sales tax on most of it, but your city might tax it. Colorado exempts food purchased for home consumption from the 2.9 percent state sales tax, and most cottage foods qualify; candy and soft drinks are the taxable exceptions. The real question is local: cities and counties can choose to tax food, and home-rule cities write their own rules entirely. Catering in Colorado: yes, taxable, and harder than in almost any other state. The rate follows the delivery location, and roughly 70 self-collecting home-rule cities each administer their own sales tax, potentially with their own registration and return.

This article explains the rules and links the authorities that set them. It is not tax advice, your state's Department of Revenue and your accountant are the final word for your situation.

Cottage food: exempt at the state level, decided at the city level

Colorado's Department of Revenue lists "food purchased for human consumption at home" among the purchases exempt from state sales tax, while candy and soft drinks are taxable (Colorado DOR, FYI Sales 4). A jar of jam or a loaf of bread sold at a farmers market for the buyer to take home fits the exemption. Candy does not.

Then comes the local layer. Per the same publication, "Cities and counties have the option of taxing food." Guidance for Colorado market vendors adds: "you should double-check with any city listed as 'home-rule' to confirm rates of tax on food and their exemptions for it" (Colorado Farm to Market, sales tax guidance). Two booths at two markets in two cities can carry two different answers; check each city, by name, before your first market day there.

Catering: destination-sourced, city by city

Prepared food and drink is taxable in Colorado, and the state's sourcing rule sends the tax to the delivery end: when property is delivered elsewhere, "the sale is sourced to the location where the purchaser receives the purchased property" (Colorado DOR, Sales Tax Guide). For a caterer, that means the event's address sets the rate, not your kitchen's.

Now the hard part. The Department of Revenue "does not administer and collect sales taxes imposed by certain home-rule cities, which instead administer their own sales taxes" (Sales Tax Guide). Roughly 70 self-collecting home-rule cities each run their own tax, and each can require its own registration and its own return (list of self-collecting jurisdictions). Serve weddings in Arvada, Golden, and Westminster in one summer and you may be dealing with three separate city tax offices on top of the state.

The Arvada worked example

The City of Arvada publishes the clearest statement of what a home-rule city expects from a caterer. An out-of-city caterer serving an Arvada event collects Arvada tax, with liability based on the event location, not the caterer's business location. The taxable base is the whole job: food and beverages, "rental of chairs, linens, and serving pieces," setup and teardown, serving staff, and delivery charges within Arvada. And the tax cannot be hidden in the price: "Sales tax must be listed on the customer invoice and may not be absorbed into the total price" (City of Arvada, caterers page). Assume other self-collecting cities think similarly, then verify each one's own rules.

One genuine help: the state's Sales & Use Tax System (SUTS) is a single portal for filing across state-collected jurisdictions and the home-rule cities that have opted in (Colorado DOR, SUTS). Participation is not universal, so check the participating jurisdictions list against the cities you actually serve. Rules and participation are current as of July 2026.

FAQ

"Do I need to collect sales tax for cottage foods in Colorado?" Not state sales tax, for most cottage foods sold for home consumption. Candy and soft drinks are taxable at the state level, and the city or county where you sell may tax food even when the state does not.

"I cater out of Denver and the event is in Arvada. Whose tax do I collect?" Arvada's, on the full invoice including rentals, setup, staff, and in-city delivery, listed as its own line. Colorado sources the sale to where the client receives it, and Arvada administers its own tax.

"Do I really have to register in every city I serve?" In self-collecting home-rule cities, possibly yes, each city sets its own registration and filing requirements. The SUTS portal consolidates filing for the cities that participate, and your accountant can map your event calendar against the self-collecting list.

Where Savi Tools fits

Savi Tools looks up the sales tax rate by address on the invoice, which matters most in a state where the rate changes city by city and the city may be running its own tax office. On the Growth plan, when your client has a full address, every invoice gets the jurisdiction-accurate rate applied automatically, and every taxed invoice records the state and ZIP it was taxed for. Your dashboard keeps a running view of what you've collected, split paid vs invoiced and address-accurate vs estimated, and at filing time you (or your accountant, through their free seat) export a clean CSV: state, ZIP, taxable amount, tax collected. Savi Tools tracks and reports; it does not file or remit tax, and it does not tell you where you owe, that stays with you and your accountant. Growth is $19/month. Start free →

Savi Tools tracks and reports collected sales tax by state and ZIP. It does not file or remit tax and does not provide nexus or tax advice. Consult your accountant. Never get surprised at tax time.