SB26-009 • 2026

Charitable Organization State Sales & Use Tax

Charitable organizations are exempt from state sales and use tax. Under current law, the definition of charitable organization for purposes of state sales and use tax includes criteria that mirror the

Taxes

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Sen. W. Lindstedt, Sen. M. Snyder, Rep. J. McCluskie, Rep. R. Stewart, Sen. C. Kipp, Sen. J. Amabile, Sen. J. Coleman, Sen. L. Cutter, Sen. J. Gonzales, Sen. I. Jodeh, Sen. C. Kolker, Sen. J. Marchman, Sen. D. Roberts, Sen. K. Wallace, Sen. M. Weissman, Rep. C. Clifford, Rep. M. Duran, Rep. K. Nguyen, Rep. M. Rutinel
Last action: 2026-04-08
Official status: Sent to the Governor
Effective date: Not listed

Plain English Breakdown

The official source does not provide specific details on how many charities will be affected or the financial impact, leaving these points uncertain.

Charitable Organizations Exempt from Sales Tax

This bill makes charitable organizations exempt from state sales and use tax in Colorado, requiring the Department of Revenue to presume an organization is charitable if it provides a letter confirming its 501(c)(3) status from the IRS.

What This Bill Does

Makes charitable organizations exempt from paying state sales and use taxes.
Requires the Department of Revenue to assume an organization is charitable if it presents a 501(c)(3) determination letter from the IRS.
Prevents the Department of Revenue from automatically assuming an organization does not qualify as charitable just because there was a change in its 501(c)(3) status.

Who It Names or Affects

Charitable organizations that meet the federal definition of a 501(c)(3).
The Department of Revenue, which will have to follow new rules when determining if an organization is charitable.
Taxpayers who support or are part of charitable organizations.

Terms To Know

Charitable Organization: An entity that operates for religious, charitable, scientific, literary, or educational purposes and meets the federal definition of a 501(c)(3) organization.
501(c)(3): A classification under the Internal Revenue Code for organizations exempt from federal income tax that are dedicated to religious, charitable, scientific, literary, or educational purposes.

Limits and Unknowns

The bill does not specify what happens if a referendum petition is filed against it.
It's unclear how many existing charities will be affected by this change in tax status.
There are no details on the potential financial impact of exempting charitable organizations from sales and use taxes.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

L.001

HOU Finance

Passed [*]

Plain English: The amendment changes when a bill about tax exemptions for charitable organizations would become law.

Changes the effective date of the bill to be after a ninety-day period following the end of the general assembly, unless a referendum petition is filed within that time.

The exact details of how and when the referendum process would affect the bill's implementation are technical and not fully explained in this amendment text.

L.005

Second Reading

Lost [**]

Plain English: The amendment changes the criteria for charitable organizations to be exempt from state sales and use tax by requiring evidence of federal tax-exempt status under Section 501(c)(3) of the Internal Revenue Code.

Charitable organizations must provide proof that they have tax-exempt status under Section 501(c)(3) of the Internal Revenue Code to qualify for state sales and use tax exemption.
The Department of Revenue will consider applications from organizations that do not automatically qualify as charitable based on federal tax-exempt status.

The amendment text is incomplete, making it unclear how exactly the new criteria would be implemented or enforced.

L.007

Second Reading

Lost [**]

Plain English: The amendment changes how the state decides if a charity can be exempt from sales tax by adding rules about what happens when the IRS takes away or suspends a charity's tax-exempt status.

If the IRS revokes or suspends an organization's tax-exempt status under federal law, the Department of Revenue will assume that the organization is no longer eligible for charitable organization status unless it can prove otherwise within 90 days.

The amendment text does not provide details on how organizations would prove they still qualify as charitable after losing their tax-exempt status from the IRS.

L.008

Second Reading

Lost [**]

Plain English: The amendment adds a requirement for charitable organizations to notify the Department of Revenue if their tax-exempt status is revoked or suspended by the IRS, and it sets deadlines for both notification and review.

Charitable organizations must inform the Department of Revenue within thirty days if the IRS revokes or suspends their tax-exempt status under Section 501(c)(3) of the Internal Revenue Code.
The Department of Revenue has up to one hundred eighty days from receiving this notification to decide whether the organization still qualifies as a charitable organization for state sales and use tax purposes.

The amendment does not specify what happens if an organization fails to notify the Department of Revenue within thirty days.
It is unclear how the Department of Revenue will determine if an organization still qualifies as a charitable organization after receiving notice from the IRS.

L.009

Second Reading

Lost [**]

Plain English: The amendment adds a condition that if the IRS revokes or suspends an organization's tax-exempt status under federal law, the Department of Revenue must consider this when deciding whether to classify the organization as charitable for state sales and use tax purposes.

Adds a new clause after 'STATUS.' on page 3, line 1 of the bill.

The exact impact on how organizations are classified as charitable is not fully explained in the amendment text.

L.010

Second Reading

Passed [**]

Plain English: The amendment adds a clause to the bill that allows the Department of Revenue to review whether an organization qualifies as a 'charitable organization' for tax exemption purposes.

Adds language allowing the Department of Revenue to review if organizations meet the criteria to be considered charitable and thus exempt from state sales and use tax.

The amendment does not specify how or under what circumstances the Department of Revenue can conduct these reviews, which may leave some details unclear.

Bill History

2026-04-08 Governor
Sent to the Governor
2026-04-07 House
Signed by the Speaker of the House
2026-04-07 Senate
Signed by the President of the Senate
2026-04-06 Senate
Senate Considered House Amendments - Result was to Concur - Repass
2026-04-02 House
House Third Reading Passed - No Amendments
2026-04-01 House
House Third Reading Laid Over Daily - No Amendments
2026-03-31 House
House Second Reading Special Order - Passed with Amendments - Committee, Floor
2026-03-10 House
House Second Reading Laid Over Daily - No Amendments
2026-03-05 House
House Committee on Finance Refer Amended to House Committee of the Whole
2026-02-11 House
Introduced In House - Assigned to Finance
2026-02-10 Senate
Senate Third Reading Passed - No Amendments
2026-02-09 Senate
Senate Second Reading Passed - No Amendments
2026-02-06 Senate
Senate Second Reading Laid Over to 02/09/2026 - No Amendments
2026-02-03 Senate
Senate Committee on Finance Refer Unamended to Senate Committee of the Whole
2026-01-14 Senate
Introduced In Senate - Assigned to Finance

Official Summary Text

Charitable organizations are exempt from state sales and use tax. Under current law, the definition of charitable organization for purposes of state sales and use tax includes criteria that mirror the federal definition of a 501(c)(3) organization. The bill requires the department to presume that an organization that presents the department with a 501(c)(3) determination letter from the internal revenue service is a charitable organization for purposes of state sales and use tax.
(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)

Current Bill Text

Read the full stored bill text

SENATE BILL 26-009
BY SENATOR(S) Lindstedt and Snyder, Kipp, Amabile, Cutter,
Gonzales J., Jodeh, Kolker, Marchman, Michaelson Jenet, Roberts,
Wallace, Weissman, Coleman;
also REPRESENTATIVE(S) McCluskie and Stewart R., Clifford, Duran,
Nguyen, Rutinel.
CONCERNING THE DETERMINATION OF WHETHER AN ENTITY IS A
CHARITABLE ORGANIZATION FOR PURPOSES OF STATE SALES AND USE
TAX.

Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. In Colorado Revised Statutes, 39-26-102, amend
(2.5) as follows:
39-26-102. Performance statement - definitions - repeal.
As used in this article 26, unless the context otherwise requires:
(2.5) "Charitable organization" means any entity organized and
operated exclusively for religious, charitable, scientific, testing for public
safety, literary, or educational purposes, or to foster national or international
________
Capital letters or bold & italic numbers indicate new material added to existing law; dashes
through words or numbers indicate deletions from existing law and such material is not part of
the act.
amateur sports competition (but only if no part of its activities involve the
provision of athletic facilities or equipment), or for the prevention of cruelty
to children or animals, no part of the net earnings of which inures to the
benefit of any private shareholder or individual, no substantial part of the
activities of which is carrying on propaganda, or otherwise attempting, to
influence legislation, and which does not participate in, or intervene in
(including the publishing or distributing of statements), any political
campaign on behalf of any candidate for public office, or any veterans'
organization registered under section 501 (c)(19) of the federal "Internal
Revenue Code of 1986", as amended. I N DETERMINING WHETHER AN
ORGANIZATION QUALIFIES AS A CHARITABLE ORGANIZATION , THE
DEPARTMENT OF REVENUE SHALL PRESUME THAT AN ORGANIZATION THAT
PRESENTS THE DEPARTMENT WITH A 501(c)(3) DETERMINATION LETTER
FROM THE INTERNAL REVENUE SERVICE QUALIFIES AS A CHARITABLE
ORGANIZATION. THE DEPARTMENT SHALL NOT PRESUME THAT AN
ORGANIZATION DOES NOT QUALIFY AS A CHARITABLE ORGANIZATION
BECAUSE OF A CHANGE IN THE ORGANIZATION'S 501(c)(3) STATUS. NOTHING
IN THIS SUBSECTION (2.5) PREVENTS THE DEPARTMENT OF REVENUE FROM
REVIEWING WHETHER AN ORGANIZATION QUALIFIES AS A "CHARITABLE
ORGANIZATION" FOR PURPOSES OF THIS SUBSECTION (2.5).
SECTION 2. Act subject to petition - effective date. This act
takes effect at 12:01 a.m. on the day following the expiration of the
ninety-day period after final adjournment of the general assembly (August
12, 2026, if adjournment sine die is on May 13, 2026); except that, if a
referendum petition is filed pursuant to section 1 (3) of article V of the state
constitution against this act or an item, section, or part of this act within
such period, then the act, item, section, or part w ill not take effect unless
PAGE 2-SENATE BILL 26-009
approved by the people at the general election to be held in November 2026
and, in such case, will take effect on the date of the official declaration of
the vote thereon by the governor.
____________________________ ____________________________
James Rashad Coleman, Sr. Julie McCluskie
PRESIDENT OF SPEAKER OF THE HOUSE
THE SENATE OF REPRESENTATIVES
____________________________ ____________________________
Esther van Mourik Vanessa Reilly
SECRETARY OF CHIEF CLERK OF THE HOUSE
THE SENATE OF REPRESENTATIVES
APPROVED________________________________________
(Date and Time)
_________________________________________
Jared S. Polis
GOVERNOR OF THE STATE OF COLORADO
PAGE 3-SENATE BILL 26-009