On August 28, 2025, Colorado's governor signed HB25B-1005, eliminating the state sales tax vendor fee effective January 1, 2026. Retailers will be required to remit 100% of state sales tax collected, with no vendor allowance. Through December 31, 2025, retailers with total taxable sales of $1 million or less per filing period could retain 4% of state sales tax collected (up to a cap) as compensation for collecting and remitting. That 4% is gone in 2026.
What Changes
- Who: All retailers collecting Colorado state sales tax — the $1M threshold that limited the fee to smaller sellers before 2026 is moot.
- How much: Through 2025, eligible retailers retained 4% of state sales tax on a filing — e.g., $400 on $10,000 of state tax. From Jan 1, 2026, that retention is $0; the full $10,000 is remitted.
- Why: The fee was created to offset administrative burden; modern filing systems have reduced that burden, and the legislature redirected the foregone allowance to other funds, with conforming amendments to the Highway Development Grant Fund and housing programs.
The vendor fee applied only to state sales tax; local and special-district fees are separately administered and retain their own rules.
What Retailers Should Do
- Update remittance math by Jan 1. If your POS or tax engine applies a 4% vendor-fee credit automatically, disable it for Colorado state tax for filings covering January 2026 and later. A carryover credit will create an under-remittance finding.
- Model margin impact. A retailer collecting $100,000 in state sales tax annually that retained $4,000 under the fee will see that $4,000 become additional remittance — a direct margin hit that should be modeled in 2026 pricing.
- Reconcile to DR 0100. Colorado's return (DR 0100) will no longer have a vendor-fee allowance line for state tax; the line will be $0. Reconcile filings to bank remittances without the credit.
Simplify Your Financial Management
Vendor fees were small but recurring — losing them raises effective tax administrative cost. Beancount.io keeps sales-tax collected, remitted, and formerly-retained fees in version-controlled plain text — so the 4% you kept in 2025 and the 100% you remit in 2026 are visible by filing period. Get started for free and make Colorado's change a posting rule, not a surprise.