How to Pay Your Colorado Excise Tax

Colorado’s Specific Ownership Tax is collected yearly by taxing the static, taxable value (85%) of a vehicle’s MSRP. The tax rate changes yearly.
Written by Jason Tushinski
Reviewed by Jessa Claeys
background
In
Colorado
, you must pay the Specific Ownership Tax (SOT) when you register a vehicle. It's collected yearly by taxing the static, taxable value (85%) of a vehicle’s original MSRP. The tax rate changes on a yearly basis.

What is an excise tax in Colorado?

Every year when you
register your vehicle in Colorado
, you’ll have to pay the Specific Ownership Tax, which is due in lieu of sales tax. 
In general, excise tax is paid on manufactured goods and things that pose some kind of harm to the environment. Regarding gasoline-powered automobiles, an excise tax is levied based on a vehicle’s emissions. Other items, such as alcohol and cigarettes, can also be subject to an excise tax.
As per Colorado Revised Statutes
Section 42-3-101
, all Colorado vehicle owners are required to pay the SOT based on the following:
  • The vehicle’s original value based on the MSRP when the car was purchased as new
  • The taxable value is 85% of the MSRP
  • The taxable value does not change throughout the lifespan of the vehicle
  • The annual tax rate does change based on the age of the vehicle
SOT is due when you pay to renew your Colorado vehicle registration. The SOT goes directly to the county where you register your vehicle. SOT fees are distributed within the county to cities, schools, special districts, etc.
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Calculating your Specific Ownership Tax payment

If you aren’t sure what your SOT tax rate is for a Class C vehicle (passenger car), see the following table:
Model Year
Tax rate for Class C vehicles 
1
2.10%
2
1.50%
3
1.20%
4
0.90%
5
0.45%
6-9
0.45%
10+
$3
In the tenth model year and beyond, you’ll be required to pay a $3 flat SOT fee.
Here’s an example of how the Colorado Specific Ownership Tax works. Say you buy a new vehicle for the manufacturer’s suggested retail price (MSRP) of $30,000. To get the vehicle’s taxable value, make the following calculation:
  • $30,000 x 0.85 = $25,500 (the taxable value)
For the first year of ownership, the SOT rate is 2.10%. So, multiply your vehicle’s taxable value by that rate:
  • $25,500 x 0.021 =  $535.50 (the amount you owe in Specific Ownership Tax)

Penalties for nonpayment

The penalties you’ll incur if you do not pay Colorado’s Specific Ownership Tax aren’t so specific (as in, we couldn’t find them online at the time of writing). That said, it is not a good idea to skip paying your taxes
If you’re worried about penalties for late or missed SOT payments,
contact the county
where you register your vehicle to confirm.

How to avoid the Specific Ownership Tax in Colorado

In most cases, you won’t be able to get out of paying Specific Ownership Tax in Colorado. That said, some citizens are exempt:
  • Vehicles owned by certain veterans (disabled veterans, Purple Heart recipients, Medal of Honor recipients, Prisoners of War, Pearl Harbor veterans)
  • Active-duty military personnel stationed in Colorado
  • Owned or leased Government vehicles
  • Mobile homes
  • Certain agricultural vehicles
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