Colorado provides an exemption from state sales and use tax on purchases of manufacturing machinery, machine tools and parts.

To qualify for the exemption, the machinery must be:

  • Used in Colorado
  • Used directly and predominantly to manufacture tangible personal property for sale or profit.
  • Included on a purchase order or invoice totaling more than $500.
  • Capitalized.
  • Of a nature that would have qualified for the federal investment tax credit under the definition of section 38 property found in the Internal Revenue Code of 1954. This includes tangible personal property with a useful life of one year or more and limits qualifying purchases of used equipment to a maximum of $150,000 annually.

For details related to the production of electricity or other details, see the Department of Revenue FYI Publication for this exemption: FYI Sales 10. Contact the Department of Revenue with questions at 303-238-7378 or visit www.colorado.gov/revenue.