Few cities have followed Colorado's sales tax exemption for period products, diapers

Gov. Jared Polis and the legislature last year waived the state’s 2.9% sales tax for menstrual products and diapers, billing it as a way to save Coloradans money on essential hygiene items.

“This new bipartisan law finally ends the sales tax on diapers and feminine hygiene products permanently and starts saving people money on these necessary products,” Polis said in a news release at the time.

But many Coloradans are still paying local sales taxes on the goods.

That’s because only a few municipalities and counties have followed the state’s lead, meaning that the majority of the sales tax burden remains.

“It was always a hope that municipalities and other taxing authorities would follow suit so there would eventually be no sales tax statewide on those products, but we couldn’t force that,” said former state Rep. Susan Lontine, D-Denver, a sponsor of the bill.

The law went into effect in August 2022, but the sales tax exemption began in January, giving the state time to work with businesses on the adjustment.

When House Bill 1055 was signed in 2022, national news outlets like CNN and CBS picked up the story, running headlines like “Colorado eliminates sales tax on diapers and menstrual products.” But the reality is that much of the sales tax burden remains since local sales taxes — imposed by municipalities and counties — combine to be much higher than the state’s rate.

In Englewood, for example, buying a box of tampons still includes a sales tax of 4.05% made up of taxes collected by the city and Arapahoe County.

Denver, Fort Collins and Aurora had already exempted menstrual products and diapers from their municipal sales taxes before the bill was signed into law. Since then, some of the state’s biggest cities, including Pueblo and Boulder, have enacted the same exemptions.

But other major cities like Colorado Springs and most municipalities in the Denver metro area have not.

Lakewood Mayor Adam Paul said part of the reason his city hasn’t exempted period products and diapers from the local sales tax is because of the complications of Colorado’s tax structure. He said it would take a lot of work with retailers and residents to make the change.

“It’s not an overnight process,” he said. “It needs outreach and education.”

He said he will encourage Lakewood’s City Council to take up the issue after the November election.

While Paul said he’s not concerned about the relatively small amount of revenue that would be lost by putting the exemptions in place, leaders in other cities have outright rejected the idea over those concerns. This month, for instance, the Steamboat Springs City Council soundly defeated a proposal to create the exemption after members voiced concerns about the impact on their budget.

“While I agree that it would be a very good thing if they were more affordable for people who struggle to afford the necessities of life, there’s also this funny counter in my brain that keeps asking: ‘At what point are we going to nickel-and-dime ourselves as a council into budget issues?’” Councilwoman Joella West said in the meeting.

The city’s finance director told the council the decision would cost Steamboat Springs $100,000 to $150,000 per year, which is less than 0.5% of annual sales tax revenue, according to The Steamboat Pilot & Today.

Nonpartisan legislative staffers predicted the change at the state level would cost Colorado $13 million in the 2023-24 fiscal year, which began July 1.

In a statement to The Colorado Sun, Colorado Springs Mayor Yemi Mobolade said the city hasn’t explored the possibility of exempting the hygiene products but that they are “tracking the conversation.”

The bill, which had bipartisan support, didn’t require cities and towns to change their tax system to be consistent with the state, but it explicitly noted that they could.

Sen. Sonya Jaquez-Lewis, a Longmont Democrat and another prime sponsor of the bill, said she won’t admonish the cities that haven’t followed the state’s decision but is happy to hear about those that have.

“Hopefully that sends a message that they are really in touch with their community members and what they’re struggling with,” she said. “If it can happen in other communities, great, but I’m not gonna judge Steamboat or any other community that is unable to do it at this point.”

She added that the state legislature taking the step does make it easier for cities to join in.

“I would encourage any local municipality to think about starting out with at least one grouping of the essential items,” she said.

Rep. Leslie Herod, a Denver Democrat and another sponsor of the bill, said their main goal was just to remove the state sales tax.

“We definitely encourage it, but they’re all autonomous bodies, and it is really their decision to decide what’s right for their community,” she said.

Elliott Wenzler is a reporter for the Colorado Sun, covering local politics, the state legislature and other topics. She also assists with The Unaffiliated newsletter. Previously, she was a community reporter in Douglas County for Colorado Community Media. She has won awards for her... More by Elliott Wenzler