Does a company that runs electric-vehicle charging stations (and isn't a utility) have to charge Colorado sales tax on the fees customers pay to charge?

Plain-English summary

A company that runs electric-vehicle charging stations in Colorado — and is not a public electric utility — asked the Department of Revenue whether it has to charge sales tax on the fees customers pay to charge their cars. The Department's answer: generally no, EV charging fees are not subject to Colorado sales tax — but with an important catch for the operator.

Colorado does impose sales tax on "electric service." The catch is what that phrase means. The sales-tax statutes don't define it, so the Department read it by its common and technical meaning: electric service is the regular, ongoing delivery of electricity by a utility through the grid to a customer's property — continuous access to electricity on demand, not a one-off sale of electricity at a single point in time.

Plugging in an EV and paying a fee for that charge is a discrete, one-time sale, not ongoing "electric service." So those charging fees fall outside the tax.

The catch: because the charging-station operator is not making a taxable sale to its customers, the operator is treated as the end user of the electricity it buys — and must pay Colorado sales tax on the electric service it purchases from the utility. In other words, the tax is paid once, upstream, by the operator, rather than charged to the EV driver.

This is a General Information Letter — general guidance the Department is not bound by, not a binding ruling.

What this means for you

EV charging station operators (non-utilities)

You generally don't charge Colorado state sales tax on the fees drivers pay to charge. But don't treat your business as fully tax-free: because your charging fees aren't a taxable sale, you are the consumer of the electricity, and you owe Colorado sales tax on the electric service you buy from your utility. Make sure you're actually paying that input tax (utilities normally collect it), rather than claiming a resale exemption you don't qualify for.

Accountants and tax professionals

The distinction is "electric service" (ongoing utility delivery, taxable under § 39-26-104(1)(d.1), C.R.S.) versus a discrete retail charge for a single charging session (not "electric service," so not taxable). The Department read the undefined term using § 2-4-101, C.R.S., the definition in § 29-8-103(4), C.R.S., and case law. The practical upshot is no resale exemption on the operator's electricity purchases — the operator bears the sales tax. This is a non-binding GIL.

Common questions

Q: Do I charge sales tax to customers who use my EV charging stations?
A: Generally no. EV charging fees are discrete, one-time sales rather than ongoing "electric service," so they are not subject to Colorado state sales tax.

Q: So is EV charging completely sales-tax-free?
A: No. Because the operator isn't making a taxable sale, it must pay Colorado sales tax on the electricity it purchases from the utility. The tax is paid by the operator on its input, not by the driver.

Q: Why is utility "electric service" taxed but charging a car isn't?
A: "Electric service" means the ongoing delivery of electricity to a customer's location on demand. A single charging session is a one-time sale, which doesn't fit that meaning, so it isn't taxed as electric service.

Q: Can I rely on this letter?
A: Treat it as guidance, not a guarantee. A General Information Letter is not binding on the Department and makes no determination for any specific taxpayer.

Q: Does this cover home-rule city taxes?
A: No. The Department administers state and state-administered local sales and use taxes only. Self-collected home-rule cities set their own rules — check with each city.

Citations and references

Statutes, rules, and authority:
- § 39-26-104(1)(d.1), C.R.S. (Colorado sales tax on "electric service")
- § 2-4-101, C.R.S. (undefined terms read in context per common usage; technical terms per their technical meaning)
- § 29-8-103(4), C.R.S. ("electric service" defined as the transmission and distribution of electricity for heat, light, or power)
- 1 CCR 201-5, Special Rule 19 (tax applies to all amounts paid for taxable gas or electric services)
- 1 CCR 201-1, Rule 24-35-103.5 (general information letter and private letter ruling procedure)
- San Isabel Electric Ass'n, Inc. v. Public Utilities Commission, 2021 CO 36 (aspects of electric service)

Source

• Landing page: Colorado Sales & Use Tax Letter Rulings
• Original PDF: GIL-25-002.pdf

Original ruling text

Office of Tax Policy
P.O. Box 17087
Denver, CO 80217-0087
[email protected]

GIL 25-002
February 10, 2025
XXXXXXXXX
XXXXXXXXX
XXXXXXXXX
XXXXXXXXX
Via Electronic Mail: XXXXXXXXX
Re: Electric Vehicle Charging
Dear XXXXXXXXX:
You submitted a request for a general information letter regarding the applicability of Colorado sales
taxes on electricity sold at electric vehicle charging stations. The Colorado Department of Revenue
(“Department”) issues general information letters and private letter rulings. A general information letter
provides a general overview of the relevant tax issues but is not binding on the Department. A private
letter ruling provides a specific determination for a specific set of facts, is binding on the Department, and
requires payment of a fee. For more information about general information letters and private letter
rulings, please see 1 CCR 201-1, Rule 24-35-103.5.
Issue
Whether the electricity sold at electric vehicle charging stations by entities other than electric utilities are
subject to Colorado sales taxes.
Discussion
Company operates electric vehicle charging stations within the State of Colorado. Company is not a
public electric utility. Company purchases electric service from electric utilities that collect sales tax on the
sale of such electric service. Company subsequently provides electric vehicle charging to its customers
for a fee.
The fees for the use of electric vehicle charging stations are generally not subject to Colorado sales tax.
Colorado imposes a sales tax on “electric service, whether furnished by municipal, public, or private
corporations or enterprises...”1 The sales tax statutes do not define “electric service.” Undefined terms
“shall be read in context and construed according to the rules of grammar and common usage."2 Those
“[w]ords and phrases that have acquired a technical or particular meaning, whether by legislative
definition or otherwise, shall be construed accordingly.” 3
“Electric service” commonly means the regular or ongoing delivery of electricity by a utility through the
electrical grid to a customer’s real property location.4 The service is not merely the discrete or occasional
1

Section 39-26-104(1)(d.1), C.R.S.
Section 2-4-101, C.R.S.
3
Id.
4
See § 29-8-103(4), C.R.S. (“‘Electric service’ means the transmission and distribution of electricity for heat, light, or power.”); San
Isabel Elec. Ass'n, Inc. v. Pub. Utilities Comm'n, 2021 CO 36, ¶ 5 (noting “three aspects of electric service—electricity generation,
2

GIL 25-002
February 10, 2025
Page 2
sale of electricity at a point in time, but continuous access to electricity at the customer’s location on
demand.5
Company provides electric vehicle charging to its customers for a fee. These discrete, one-time sales do
not fall within the common meaning of “electric service.” As a result, the fees for electric vehicle charging
stations are not subject to Colorado sales tax. However, charging station operators that are not making
taxable sales must pay the Colorado sales tax on the electric service they purchase.
Miscellaneous
This letter represents the good-faith opinion of Department personnel who are knowledgeable on state
taxes issues. However, the Department does not make a specific determination on any of the issues
raised and the Department is not bound by this general information letter.
The Department administers state and state-administered local sales and use taxes. This letter does not
address sales and use taxes administered by self-collected home-rule cities. You may wish to consult
with those local governments that administer their own sales or use taxes about the applicability of those
taxes. Visit our website at Tax.Colorado.gov for more information about state and local sales taxes.
Thank you for your request.
Sincerely,

Office of Tax Policy
Colorado Department of Revenue

long-distance power transmission, and local distribution of electricity to end users”); Highland Supply Corp. v. Illinois Power Co., 973
N.E.2d 551, 560 (Ill. Ct. App. 2012) (“[T]he plain and ordinary meaning of ‘electric service’ includes the delivery of electricity, as
there is no electric ‘service’ without the delivery of electricity.”); see also 18 CFR § 35.2(a) and 25 CFR § 175.100 (defining
“electrical service”); National Fire Protection Association 70, commonly known as the National Electrical Code, Chapter 1 - Article
100 (defining “service”). The NEC is incorporated in the State Electrical Board Rules, 3 CCR 710-1(1.5);
https://occ.colorado.gov/utility-information; Colorado Utilities Report 2010, Governor’s Energy Office; Title 40 of the Colorado
Revised Statutes.
5
1 CCR 201-5, Special Rule 19 (“The tax applies to all amounts paid for taxable gas or electric services, irrespective of whether
there is an actual consumption; the tax is imposed on all payments, whether in the form of a minimum charge, a flat rate, or
otherwise.”)