On August 25, 2025, the Colorado Department of Revenue (DOR), issued Private Letter Ruling PLR 25-004, clarifying that a bakery’s sale of cookies, pies, and cakes are exempt from sales tax when prepared for off-premise consumption. This means that placing an order, whether in an app, for catering or in person, sales tax will not apply if the items are packaged for takeout. According to the DOR’s ruling, boxed baked goods, single boxed cookies or treats and large orders prepared for events or office functions are exempt from Colorado state sales tax. Colorado follows federal guidelines to determine which food items are tax-exempt. Under these guidelines, cold, packaged food meant to be eaten elsewhere is not taxed.
This ruling only applies to Colorado state sales tax. Some cities in Colorado, known as home-rule cities, collect their own taxes and make their own rules. Depending on where you are purchasing from, local tax might still apply. Customers and businesses are encouraged to check with local city tax offices to verify if local sales tax applies.
This clarification helps customers and small businesses alike. These purchases will now have clearer pricing, and large catering orders will see some savings with no state sales tax added. (PLR 25-004: Sales Tax Exemption for Items Sold by Bakery, Colorado Department of Revenue, August 25, 2025)