Sales Tax Exemption Study
Sales tax exemptions eliminate the sales tax from specified purchases of tangible products in their final form to households or businesses which consume or use the product. They can be considered indirect expenditures for the state as they reduce the amount of sales tax that ordinarily may have been collected by the state. Policy makers enact sales tax exemptions for various reasons, including the promotion of certain behaviors (e.g., purchasing low emitting vehicles) and social equity (e.g., removing the regressivity of the sales tax on food).
The Sales Tax Exemption Study estimates values for each sales tax exemption. Periodic benchmarking is completed to align with the release of U.S. Economic Census data, and yearly indexing is performed on each estimate. Additionally, these sales tax exemption values are included in the Colorado Tax Profile & Expenditure Report, as required by §39-21-303, C.R.S.
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