Effective January 1, 2023, Colorado has enacted legislation creating a state-level sales and use tax exemption on the sale, storage, use or consumption of incontinence products, diapers, and period products. The legislation further provides that statutory cities and counties may choose to adopt either or both exemptions. Self-collecting home-rule municipalities are not affected by this legislative change. The January 2023 release of the Colorado Sales and Use Tax Rate publication (DR 1002) will list the state-administered local jurisdictions that will allow the exemption.
Per the legislation, “incontinence products and diapers” means absorbent cloth or disposable products worn by humans who are incapable of, or have difficulty, controlling their bladder or bowel movements. “Period products” means consumer products used to manage menstruation. The legislation specifically notes that the purpose of the new exemption is to address the inequitable burden that sales tax on these products places on individuals for whom the products are essential.
The bill creating the exemption took effect on August 10, 2022, but the exemption applies to sales on and after January 1, 2023. This will allow the Colorado DOR and retailers time to update their systems, forms, etc. (H.B. 22-1055; Release, Colorado Department of Revenue, August 18, 2022)