Car Rental Business Regulations in Colorado

Colorado requirements at a glance

The daily rental fee and congestion impact fee

Colorado charges a flat per-day fee on vehicle rentals of 30 days or less, rather than a percentage. It has two components: a Daily Vehicle Rental Fee, inflation-adjusted each July ($2.44/day for the period July 2026 through June 2027), and a Congestion Impact Fee created by SB 24-184, currently $3.13/day — a combined $5.57 per rental day. It must be listed separately on the invoice as the "Colorado road safety program fee," and is filed monthly on Form DR 1777, due the 20th of the following month, with a return required even when no fee is due.

In July 2026 the 10th Circuit Court of Appeals upheld the congestion impact fee against an industry challenge, holding that because renters pay it rather than the rental businesses themselves, it does not violate the constitutional protections the challenge relied on.

Vehicles that pay this daily fee are exempt from the separate annual road safety surcharge and bridge safety surcharge that apply to ordinary vehicle registrations — you pay one or the other, not both.

Why a multi-location operator may file with several cities

Colorado has two self-collecting counties and 72 self-collecting home-rule municipalities — including Denver — that administer their own sales tax independently of the state, with the right to set their own tax base and audit rules. A state sales tax license does not cover these cities; you register and file with each one directly.

Denver is a concrete example: it applies a special 7.25 percent rate to short-term (30 days or less) vehicle rentals, above its general sales tax rate, and treats collision damage waiver charges as taxable at that rate rather than as insurance. An operator with locations in Denver and a state-collected county is effectively running two separate tax compliance processes for the same rental product.

What must a Colorado rental agreement disclose?

Collision damage waiver terms have their own statute. The agreement must carry a boldface notice, at least 10-point type, advising the renter not to sign the waiver if they already have coverage through certain credit cards or their own auto policy, and the waiver must be optional. Separately, any additional mandatory charge — a customer facility charge, airport concession recovery fee, road safety program fee, or vehicle license recovery fee — must be included in the good-faith price estimate given at quote time and itemized in the contract. Non-disclosure of either is a deceptive trade practice under the Colorado Consumer Protection Act.

What insurance and registration do you need?

Minimum liability is 25/50/15 — $25,000 bodily injury per person, $50,000 per accident, $15,000 property damage — with uninsured/underinsured motorist and $5,000 medical payments coverage included automatically unless rejected in writing.

Register the entity with the Secretary of State ($50 for an LLC), obtain a Standard Retail sales tax license from the Department of Revenue ($50 refundable deposit), and register vehicles with the DMV. Operators with 10 or more vehicles in the same owner's name can apply for a common registration expiration month through Permanent Fleet Registration.

Frequently asked questions

• 1What is Colorado's daily vehicle rental fee?+

  A combined $5.57 per rental day for July 2026 through June 2027: a $2.44 Daily Vehicle Rental Fee plus a $3.13 Congestion Impact Fee, on rentals of 30 days or less.

• 2Do rental vehicles also pay Colorado's road safety and bridge safety surcharges?+

  No. Vehicles that pay the daily rental fee are exempt from both annual surcharges.

• 3Why would a Colorado operator file sales tax with a city separately from the state?+

  Colorado has 72 home-rule cities, including Denver, that self-administer their own sales tax rather than using the state system, each with its own registration and rules.

• 4Does Denver charge extra tax on car rentals?+

  Yes, a special 7.25 percent rate on short-term rentals of 30 days or less, above its general sales tax rate, applied to the rental charge and to collision damage waiver fees.

• 5What is the minimum liability insurance in Colorado?+

  25/50/15, with uninsured/underinsured motorist and $5,000 medical payments coverage included automatically unless the renter rejects it in writing.

• 6Is Colorado's rental tax rate really the second highest in the country?+

  Yes, per Tax Foundation's 2025 data, at an average effective rate of about 21.5 percent, behind only Minnesota.

Related

Neighboring states: Utah · New Mexico · Wyoming · Kansas

Sources: Colorado Department of Revenue · C.R.S. §§43-4-804, 43-4-805, 6-1-203, 6-1-206 · Colorado Division of Insurance