Retail Delivery Fees: What E-Commerce Sellers Need to Know
If you ship products to customers in Colorado—or potentially other states soon—you may need to collect a retail delivery fee. This relatively new type of charge is separate from sales tax and has its own compliance requirements.
This guide explains what retail delivery fees are and how to handle them.
Shipping and Delivery
What Is a Retail Delivery Fee?
The Basics
A retail delivery fee is a per-delivery charge imposed on shipments containing taxable goods. Unlike sales tax (which is a percentage of the sale), delivery fees are typically a flat fee per delivery.
| Aspect | Sales Tax | Retail Delivery Fee |
|---|---|---|
| Calculation | Percentage of sale | Flat fee per delivery |
| What triggers it | Taxable sale | Delivery of taxable items |
| Who collects | Retailer/marketplace | Retailer/marketplace |
| Purpose | General revenue | Often earmarked (transportation, environment) |
Colorado's Retail Delivery Fee
Colorado was the first state to implement a retail delivery fee:
| Detail | Information |
|---|---|
| Current rate | $0.28 per delivery (FY 2025-2026) |
| Previous rate | $0.29 (FY 2024-2025) |
| Applies to | Deliveries by motor vehicle to Colorado addresses |
| Requirement | At least one item subject to state sales or use tax |
Who Must Collect
If you're a retailer or marketplace facilitator that:
- Collects Colorado sales or use tax on tangible personal property
- Delivers (or has delivered) items by motor vehicle to Colorado
...you're likely required to collect and remit the retail delivery fee.
How the Fee Works
When It Applies
The retail delivery fee applies when:
- A delivery is made by motor vehicle to a Colorado location
- The delivery contains at least one item of tangible personal property
- That item is subject to state sales or use tax
When It Doesn't Apply
| Scenario | Fee Applies? |
|---|---|
| All items tax-exempt | No |
| Customer picks up (no delivery) | No |
| Non-motor vehicle delivery | No |
| B2B with resale certificate | Generally no (items not subject to sales tax) |
Important Nuance
The fee applies even if the sale itself is exempt from sales tax—as long as the items delivered would have been taxable in another scenario.
Example: You sell office supplies to a tax-exempt nonprofit. The sale is exempt, but if office supplies are generally taxable in Colorado, the delivery fee may still apply.
Compliance Requirements
Collecting the Fee
| Method | How It Works |
|---|---|
| Add to invoice | Show as separate line item |
| Include in price | Build into product pricing |
| Checkout addition | Add at point of sale |
Best practice: Show the fee separately for transparency.
Reporting and Remitting
The retail delivery fee is reported separately from sales tax:
- File with Colorado Department of Revenue
- Separate reporting schedule
- Different from your sales tax return
Record Keeping
Track:
- Number of qualifying deliveries
- Fee collected per delivery
- Total fees collected
- Fees remitted
Marketplace Facilitator Rules
Who's Responsible?
In Colorado, marketplace facilitators (like Amazon, eBay, Shopify) are responsible for collecting the retail delivery fee on sales they facilitate.
| Seller Type | Who Collects Fee? |
|---|---|
| Marketplace sales (Amazon, eBay) | Marketplace collects |
| Your own website | You collect |
| Direct sales | You collect |
What Sellers Still Need to Do
Even if marketplaces collect the fee:
- Track your deliveries for records
- Collect on direct sales
- Understand your compliance obligations
Impact on E-Commerce Sellers
Cost Considerations
$0.28 per delivery may seem small, but it adds up:
| Monthly Deliveries to CO | Annual Fee Impact |
|---|---|
| 100 | $336 |
| 500 | $1,680 |
| 1,000 | $3,360 |
| 5,000 | $16,800 |
Pricing Strategies
How sellers handle the fee:
| Strategy | Pros | Cons |
|---|---|---|
| Pass to customer | Maintains margins | May reduce conversion |
| Absorb the cost | Better customer experience | Reduces profit |
| Build into shipping | Hidden from product price | May seem like high shipping |
| Build into product price | Simplest | Affects all customers, not just CO |
Customer Communication
If you pass the fee to customers:
- Clearly label it on invoices
- Explain what it is if asked
- Be transparent about state requirements
Other States Considering Delivery Fees
The Trend
Colorado's retail delivery fee has attracted attention from other states looking for revenue. More than a dozen states and municipalities are considering similar fees.
States to Watch
| State/City | Status |
|---|---|
| Minnesota | Considering |
| Various cities | Exploring options |
| Multiple states | Legislative discussions |
This list is evolving—monitor for updates.
Why States Are Interested
| Reason | Explanation |
|---|---|
| Revenue generation | E-commerce growth = delivery growth |
| Transportation funding | Earmark for road maintenance |
| Environmental concerns | Delivery vehicle emissions |
| Local impact | Delivery traffic in communities |
How Delivery Fees Differ from Shipping Taxes
Shipping Taxes
Many states tax shipping charges as part of the sale:
| State Approach | How It Works |
|---|---|
| Shipping taxable | Tax applied to shipping charge |
| Shipping exempt | No tax on shipping |
| Mixed rules | Depends on various factors |
Retail Delivery Fees
| Feature | Shipping Tax | Delivery Fee |
|---|---|---|
| Based on | Shipping charge amount | Flat fee per delivery |
| Varies with order size | Yes | No |
| Part of sales tax | Yes | No—separate |
| Reporting | With sales tax | Separately |
Your Resale Certificate and Delivery Fees
B2B Transactions
When you sell to a business buyer who provides a resale certificate:
- The sale is exempt from sales tax
- The delivery fee may or may not apply
Key Question
Does the delivery fee apply to tax-exempt B2B sales?
Colorado's position: The fee applies if the items delivered would normally be subject to sales tax—even if this particular sale is exempt.
Practical impact: When selling to resellers with certificates, you may still need to collect the delivery fee.
Document Everything
Keep records of:
- Resale certificates on file
- Which deliveries were to resellers
- Whether delivery fee was collected
Compliance Checklist for Colorado
If You Ship to Colorado
- ☐ Determine if you have nexus in Colorado
- ☐ Register for Colorado retail delivery fee (if required)
- ☐ Update your checkout to collect the fee
- ☐ Track deliveries to Colorado
- ☐ File and remit fees per schedule
- ☐ Keep detailed records
If You Use Marketplaces
- ☐ Verify marketplace is collecting fee
- ☐ Track marketplace vs. direct sales
- ☐ Collect fee on direct Colorado shipments
- ☐ Understand your reporting obligations
Common Questions
"Is the delivery fee taxable?"
In Colorado, the retail delivery fee is not subject to state or state-administered local sales taxes. However, some home-rule cities may treat it differently.
"What if I make multiple deliveries for one order?"
The fee applies per delivery. If you split an order into multiple shipments, each delivery may trigger the fee.
"Do I collect the fee on free shipping orders?"
Yes—the fee is based on the delivery, not on whether you charged for shipping. Free shipping doesn't exempt you from the retail delivery fee.
"What about returns?"
If a customer returns items, you may be able to refund the delivery fee. Check current Colorado guidance.
"How do I handle orders with some taxable and some exempt items?"
If the delivery contains at least one item subject to state sales or use tax, the delivery fee applies to that delivery.
Planning for the Future
Stay Informed
Retail delivery fees are likely to spread. To prepare:
- Monitor legislation in states where you sell
- Build flexibility into your systems
- Plan for compliance costs
- Consider pricing strategies proactively
System Considerations
Ensure your e-commerce platform can:
- Calculate and collect per-delivery fees
- Distinguish fees from sales tax
- Report fees separately
- Handle multiple states (if fees spread)
Key Takeaways
- Colorado charges $0.28 per delivery of taxable goods
- Separate from sales tax with its own reporting
- Marketplaces usually collect on their platform sales
- You collect on direct sales to Colorado
- More states may follow Colorado's lead
Stay Ahead of Compliance
As new fees and taxes emerge, make sure your business foundation is solid. Proper registration and documentation protect you as rules evolve.
Apply for Your Resale Certificate →
Questions about retail delivery fees? Contact us for guidance.