When Does Colorado’s Retail Delivery Fee Apply?
Colorado imposes a Retail Delivery Fee on any retail sale of tangible personal property for delivery by a motor vehicle to a location in Colorado.
A “motor vehicle” is defined by the State as:
- Any self-propelled vehicle that is designed primarily for travel on the public highways
- And is generally and commonly used to transport people and property over the public highways.
To determine whether the Retail Delivery Fee applies to a delivery, a retailer must consider all modes of transportation used to make the delivery from the time immediately after the acceptance of the order until the items are delivered to the purchaser’s specified location.
The retailer or marketplace facilitator that collects the Sales or Use Tax on the tangible personal property sold and delivered, including delivery by a third party, is liable for the Retail Delivery Fee. Unless they qualify for the exemption.
Deliveries include when any taxable goods are mailed, shipped, or otherwise delivered by motor vehicle to a purchaser in Colorado.
The fee applies regardless of whether the motor vehicle is owned or operated by the retailer or by a third-party. Such as a shipping company or the United States Postal Service.
Transactions Exempt from Colorado’s Retail Delivery Fee
The fee does not apply in any of the following situations:
- The purchaser picks up the tangible personal property at the retailer’s business location.
- The tangible personal property is delivered to a location outside of Colorado.
- Wholesale sales made to licensed retailers for the purpose of resale.
- “Over-the-counter” sales by mobile retailers (e.g., food trucks) where there is no post-order delivery by a motor vehicle
- The delivery is made entirely without the use of a motor vehicle (e.g. the delivery is made exclusively by bicycle, electrical assisted bicycle, electric scooter, or low-power scooter).
If every item in a retail sale is exempt from sales tax, the delivery is also exempt from the RDF.
Mixed Transactions and Multiple Shipments
However, if one or more items in the transaction is subject to sales tax, then the RDF is due. Each sale for delivery is a single “retail delivery” regardless of how many shipments are needed to deliver the items purchased.
The Retail Delivery Fee is due regardless of the shipping costs.
Service Calls vs. Product Replacement
If a customer makes a service call to a customer’s location (such as a plumber, electrician, locksmith, repair service, etc.) and a part or item is sold to the customer that is subject to sales tax, then the Retail Delivery Fee does not apply.
The Retail Delivery Fee does not apply when the primary purpose of the job is a service call to a customer’s location in order to repair something, such as a water heater, or diagnose a problem. And in order to complete the job you sell a part or have to replace the item.
The service call is not subject to the Retail Delivery Fee:
- Whether or not you have the part or item with you when you arrive at the customer’s location
- Or need to make a separate trip to obtain the part or item to complete the job.
However, it does apply when the primary purpose of the job is to replace an item that requires delivery by motor vehicle to the customer’s location, such as a water heater or HVAC unit.
The transaction is subject to the RDF because the customer purchased tangible personal property for delivery by a motor vehicle.
The Retail Delivery Fee may increase each July to adjust for inflation.
The total Retail Delivery Fee:
- For the period of July 2025 to June 2026: $0.28
- For the period of July 2026 to June 2027: $0.31
Not sure if you should be charging retail delivery fees? Book a call with our team.
