Colorado law paves way for counties to raise lodging tax
- May 27, 2025 | Jennifer Sokolowsky
A new law allows counties in Colorado to raise lodging taxes to a maximum of 6% if the taxes are approved by voters. Previously, county governments could only ask voters to approve lodging taxes of up to 2%. Cities are already allowed to raise lodging taxes up to 6% with voter approval.
The measure, signed by Governor Jared Polis on May 13, 2025, also expands the types of projects counties can use lodging tax revenue for. Currently, counties are legally allowed to spend revenues from accommodations taxes on affordable housing, child care for local workers, and enhancing visitor experiences, along with tourism marketing and promotion. The latest law adds infrastructure and public safety to the list of legal expenditure areas.
The measure is designed to help counties gain more revenue sources, according to legislators. The changes will “benefit both the people who live in the community and help power the tourism workforce, but also ensure that visitors have a good experience when they come and will want to come back,” said bill sponsor Senator Dylan Roberts.
Voters in several Colorado communities approved lodging tax increases in the 2022 and 2023 elections, including Aspen, Carbondale, Dillon, Steamboat Springs, Winter Park, and more. The new law allows counties to ask voters to take similar steps.
Local governments gain more power to regulate STRs
In Colorado, the state governs short-term rentals (STRs) by administering some lodging taxes and defining local governments’ authority to regulate STRs. However, STR rules are set by local authorities, and in recent years, the state has increased the power of cities and counties to tax and regulate them.
A statewide law passed in 2023 authorized counties to require STR property owners and agents to include an STR license in online listings. The law also allows counties to require STR marketplaces such as Airbnb and Vrbo to help them enforce rules around licensing. Jurisdictions including Boulder, Douglas, Clear Creek, Larimer, and Summit counties have since created laws that, for example, require marketplaces to delete illegal listings when notified by county officials.
On the other hand, state lawmakers did pass a law in 2024 clarifying that local governments can’t place extra lodging tax reporting requirements on accommodations marketplaces. Governments must have the same rules and requirements for accommodations intermediaries as for any other marketplace facilitators required to collect and remit local lodging taxes.
Colorado lodging tax compliance
In Colorado, STR operators in unincorporated counties are required to collect county lodging tax and state sales tax, which are administered by the Colorado Department of Revenue. Short-term rental operators are legally required to register with the department for tax purposes.
Some vacation rental marketplaces collect Colorado lodging taxes on behalf of operators when the listing is booked. However, marketplaces don’t collect all lodging taxes in all jurisdictions, and operators are responsible for making sure they comply with lodging tax requirements. Even if a rental marketplace collects lodging taxes, Colorado hosts are still required to register for a state tax license and file lodging tax returns.
Get help with Colorado lodging taxes
Avalara MyLodgeTax can help vacation rental hosts automate and simplify lodging tax compliance on the local and state level, including tax registration and filing. For more on lodging taxes in Colorado, see our state vacation rental tax guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.
