Firearms Excise Tax

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Background

Enacted in 2024 by Proposition KK and taking effect on April 1, 2025, the firearms excise tax is imposed on firearms dealers, manufacturers, and ammunition vendors on their net taxable sales from the retail sale of any firearm, firearm precursor part, or ammunition in Colorado.¹ Firearms excise tax revenue is exempt from TABOR limitations on state revenue and spending as a voter-approved revenue change. Retail vendors of firearms, precursor parts, and ammunition are required to register with the Department of Revenue for an excise tax account. For registration and tax filing instructions, visit the Department of Revenue website.

Tax Rate

Firearms are taxed at a rate of 6.5 percent of sellers’ net taxable sales.² Net taxable sales³ are defined as the aggregate purchase price received less:

• sales to peace officers, law enforcement agencies, and active-duty members of the United States military;
• purchased firearms that were returned and refunded; and
• the purchase price of property sold on account found to be worthless and charged off for income tax purposes.

Tax Exemptions

If total retail sales of a firearms dealer, manufacturer, or ammunition vendor are less than $20,000 per year, the business is not subject to the firearms excise tax.⁴ Retail sales to peace officers, law enforcement agencies, and active-duty members of the United States military are exempt from the excise tax.⁵

Distribution

Through the Old Age Pension Fund, revenue from the tax is credited to the General Fund, then transferred to the Firearms and Ammunition Excise Tax Cash Fund.⁶ Revenue in the fund is used for implementation and administration costs before being distributed as follows:⁷

• the first $30 million, adjusted for inflation after FY 2024-25, is transferred to the Colorado Crime Victim Services Fund in the Division of Criminal Justice of the Department of Public Safety for crime victim services grants;
• the next $5 million in each fiscal year is transferred to the Behavioral and Mental Health Cash Fund for the continuation and expansion of the veterans mental health services program;
• the next $3 million in each fiscal year is transferred to the Behavioral and Mental Health Cash Fund for the continuation and expansion of access to behavioral health crisis response system services for children and youth; and
• the next $1 million in each fiscal year is transferred to the School Security Disbursement Program Cash Fund and is subject to annual appropriation by the General Assembly.

Federal Taxes

The federal government has imposed a federal excise tax on firearms since 1919. A 10 percent excise tax is imposed on manufacturers for the sale of pistols and revolvers and an 11 percent excise tax is imposed on manufacturers for the sale of other firearms, cartridges, and shells. The tax applies only to domestic sales and does not apply to firearm parts, though it does apply to complete but unassembled firearms. Exemptions to the federal firearms and ammunition excise tax include:

• sales to the Department of Defense and Coast Guard;
• sales to state and local governments;
• sales to nonprofit educational organizations;
• firearms for use in vessels and aircraft;
• sales by producers of less than 50 guns per year; and
• firearms and ammunition used by firearms manufacturers, importers, and producers.

For more information, visit Congress’ website on the firearms and ammunition excise tax.

State Comparisons

California and New York impose an excise tax on firearms and ammunition, levied at a rate of 11 percent. In addition, Washington and Pennsylvania assess a flat fee on certain firearm sales, and a few local governments such as Seattle, Washington; Tacoma, Washington; and Cook County, Illinois levy taxes or fees on firearms.

¹Section 39-37-101 et seq., C.R.S.

²Section 39-37-104 (1), C.R.S.

³Section 39-37-103 (12), C.R.S.

⁴Section 39-37-103 (3)(b)(I), C.R.S.

⁵Section 39-37-105, C.R.S.

⁶Section 39-37-110, C.R.S.

⁷Section 39-37-301 (2), C.R.S.

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