Colorado Retail Delivery Fee (2026) — What Etsy and Shopify Sellers Need to Know
Colorado's Retail Delivery Fee is $0.28 per order in 2026. Here's what Etsy and Shopify sellers need to know about who it applies to, the small seller exemption, and how to stay compliant.
Last updated: April 2026 — fee rate and small seller exemption verified for FY 2025–2026.
Colorado’s Retail Delivery Fee launched in July 2022, and it’s been generating confusion among Etsy and Shopify sellers ever since. The rate changes every year, the exemption rules aren’t always obvious, and the rules differ depending on how you sell.
If you ship handmade goods to Colorado customers, here’s what you actually need to know.
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What is the Colorado Retail Delivery Fee?
The Colorado Retail Delivery Fee (RDF) is a state-mandated fee on retail sales delivered by motor vehicle to a Colorado address. It was established under Colorado House Bill 21-1110 and went into effect July 1, 2022.
The fee applies per transaction — not per item. A customer who orders five things in one cart pays one RDF, even if those items ship in separate packages.
The fee funds six specific state programs: Clean Fleet infrastructure, Clean Transit, Air Pollution Mitigation, Bridge and Tunnel improvements, Community Access, and a General Delivery component. You don’t need to track each component separately — it all gets reported as one combined figure.
What’s the current rate?
For FY 2025–2026 (July 1, 2025 through June 30, 2026), the Colorado RDF is $0.28 per retail delivery.
The rate adjusts annually based on state funding needs. Here’s how it’s changed since the fee launched:
| Period | Rate per delivery |
|---|---|
| July 2022 – June 2023 | $0.27 |
| July 2023 – June 2024 | $0.28 |
| July 2024 – June 2025 | $0.29 |
| July 2025 – June 2026 | $0.28 |
The FY 2025–2026 rate dropped slightly from the prior year — a small but notable change if you’ve been quoting the old figure to customers. Check Colorado’s official RDF rates page each July for the updated amount.
Who actually has to collect it?
Not every seller shipping to Colorado. The RDF only applies to a retail delivery when all four of these conditions are true:
- The buyer is located in Colorado
- The seller is required to remit sales tax in Colorado (i.e., has Colorado nexus)
- At least one item is delivered by motor vehicle
- At least one item in the order is subject to Colorado sales tax
If an order contains only non-taxable goods — food, certain exempt items — no RDF applies.
The small seller exemption
This is the part most small makers miss entirely.
If your total retail sales in Colorado were $500,000 or less in the prior calendar year, you are exempt from collecting and remitting the RDF. New businesses also get an exemption until Colorado sales cross $500,000 — after which the obligation kicks in 90 days later.
For most handmade sellers on Etsy or Shopify, you’re almost certainly under that threshold. The RDF is primarily a concern for larger-volume merchants doing serious business in Colorado. If you’re a small DTC maker, this fee probably doesn’t require any action from you — especially if you sell through Etsy (more on that below).
Something changed in 2023 — you can now pay the fee yourself
Before May 2023, sellers were required to collect the RDF from buyers and pass it on to the state. SB23-143 changed that: you can now choose to absorb the fee yourself and pay it directly to Colorado, rather than charging it to the customer.
This is entirely optional. Most sellers continue to collect it at checkout. But if you’d prefer not to show the fee on invoices — or if you sell through platforms that handle it for you — this gives you more flexibility in how you structure your pricing.
How is the RDF reported?
If you’re required to collect and remit the fee, you file it on Form DR 1786 — a separate Colorado return just for the Retail Delivery Fee. It follows the same filing frequency as your Colorado sales tax return. If you file sales tax quarterly, your DR 1786 is due quarterly.
Most small makers won’t need to file at all, thanks to the $500,000 exemption threshold.
If you’re unsure whether you need to file, contact the Colorado Department of Revenue Taxpayer Helpline at 1-303-238-8737 or speak with a tax professional familiar with Colorado sales tax requirements.
How Etsy handles the Colorado RDF
Etsy operates as a marketplace facilitator — which means it takes on responsibility for collecting and remitting most state taxes on behalf of sellers, and the Colorado RDF is included in that.
If you sell on Etsy, you don’t need to do anything. Etsy collects the fee from your Colorado buyers and sends it to the Colorado Department of Revenue. The amount shows up on your seller invoice as “Retail Delivery Fees.” No extra setup, no separate filing on your part.
This is consistent with how Etsy handles marketplace facilitator taxes across all US states.
How Shopify handles the Colorado RDF
Shopify’s situation is a bit different — and it matters for makers running their own Shopify store.
Collection is automatic. If you’re set up to collect sales tax in Colorado, Shopify adds the RDF to qualifying orders without any changes needed in your admin. The fee appears as a separate line item called “Retail Delivery Fee” on the order, and it shows up in your sales tax report.
But reporting is on you. Shopify isn’t a marketplace facilitator in the same way Etsy is. You’re running your own store through their platform, which means you remain responsible for filing the Colorado DR 1786 and paying the fee at the same time as your sales tax return.
Pull the RDF total from your Shopify sales tax report when you’re preparing that filing. It’s already broken out for you — you just need to make sure it ends up on the right return.
For more on how Shopify handles state tax collection generally, see our guide to Shopify marketplace facilitator taxes.
Keeping track of the RDF in your books
For Etsy sellers, the RDF is essentially invisible in your day-to-day operations — Etsy handles all of it. For Shopify sellers, you need accurate records to reconcile the fee when filing.
The RDF is a pass-through: you collect it from the customer and forward it to the state. It shouldn’t affect your COGS or your profit margin calculations. But it does need to appear correctly in your records.
If you use Craftybase to manage your handmade business finances, keep your Colorado RDF amounts separate from your revenue. The easiest approach is to treat them as a tax liability — money collected on behalf of the state, not yours to keep. That distinction matters at tax time, and having it clear in your records saves time when you’re filing DR 1786.
For makers still tracking everything in spreadsheets, the risk is accidentally mixing RDF amounts with actual sales revenue. A dedicated column or category in your spreadsheet keeps things clean.
Frequently Asked Questions
What is the Colorado Retail Delivery Fee rate in 2026?
For FY 2025–2026 (July 1, 2025 to June 30, 2026), the Colorado Retail Delivery Fee is $0.28 per retail delivery. The fee applies once per order — not per item — regardless of how many items ship or how many packages are used. Colorado adjusts the rate annually; check the official rates page each July for the updated figure.
Is there a small seller exemption for the Colorado Retail Delivery Fee?
Yes. If your total retail sales in Colorado were $500,000 or less in the prior calendar year, you are exempt from collecting and remitting the RDF. Most small and mid-sized handmade sellers fall well under this threshold. New businesses are also exempt until their Colorado sales cross $500,000 — at which point the requirement kicks in 90 days later.
Do Etsy sellers have to collect the Colorado Retail Delivery Fee themselves?
No. Etsy acts as a marketplace facilitator and handles collection and remittance of the Colorado RDF on sellers' behalf. The fee appears on your seller invoice as "Retail Delivery Fees" — but you don't need to configure anything, collect anything extra, or file separately. This applies to all Etsy orders shipped to Colorado.
What happens if a customer returns their order — is the RDF refunded?
No. The Colorado Retail Delivery Fee is non-refundable, even when a customer returns their purchase. The fee covers the delivery itself — once that happens, the fee stands regardless of what the buyer does with the item afterward. This applies whether you're on Etsy, Shopify, or selling direct.
Does the Colorado RDF apply when shipping is free?
Yes. Whether shipping is free or charged, the RDF still applies to qualifying orders delivered by motor vehicle to a Colorado address. The fee is tied to the delivery itself — not to whether the customer paid a shipping cost. Keep this in mind when running free shipping promotions: the RDF will still appear on taxable Colorado orders.
Does the Colorado Retail Delivery Fee apply to digital products?
No. The Colorado RDF only applies to physical goods delivered by motor vehicle. Digital products — patterns, downloads, digital art files — aren't subject to the fee since there's no physical delivery involved. If you sell a mix of physical and digital items, only the physical orders to Colorado addresses are affected.
Still have questions?
For more detail on the Colorado Retail Delivery Fee, visit the Colorado Department of Revenue website. For questions specific to your business situation, contact the CDOR Taxpayer Helpline at 1-303-238-8737 or work with a tax professional familiar with Colorado sales tax requirements.
Understanding how fees like the RDF flow through your orders is part of running a handmade business properly. If you’re still tracking your finances in spreadsheets, Craftybase can help you keep material costs, expenses, and order data in one place — which makes tax time considerably less stressful.
