Manufacturers and industrial processors with facilities located in Colorado may be eligible for a utility tax exemption. Colorado offers an exemption from state sales tax and some local taxes on the purchase of electricity, natural gas, and water used in qualifying production activities. This tax exemption is authorized by C.R.S. §39-26-102(21).

Exemption Language of C.R.S. §39-26-102(21)

"The sale, use, storage, or consumption of electricity, coal, gas, fuel oil, steam, nuclear fuel, and coke... are exempt from sales and use tax when used for any of the following purposes: processing, manufacturing, mining, refining... and all industrial uses."

Utility Study Requirement for Exemption Qualification

A Colorado utility tax study must list every piece of equipment and appliance (production and non-production) that uses the utility and the annual consumption of each. Failure to properly calculate or classify utility usage is cause for denial of the exemption.

Colorado Statute of Limitations on Tax Refund

3 years

State Sales Tax Rate: 2.9%

Average Local Sales Tax Rate: 4.75%

Helpful Resources

Colorado Utility Exemption Certificate: Form DR 1666

Colorado Utility Exemption Statute/Rule: C.R.S. §39-26-102(21)

Colorado Claim Form for Tax Refund: Claim for Refund - DR 0137B