COLORADO SPRINGS, Colo. (KOAA) — Colorado lawmakers have signed a law eliminating the state's vendor fee program, ending a 90-year practice that allowed small retailers to keep up to $1,000 monthly from state sales tax collections to cover administrative costs.
The new law takes effect in January 2026 and will impact retailers with total taxable sales of $1 million or less during filing periods. These businesses previously could retain a portion of collected state sales tax as compensation for handling tax collection duties.
Last year, the vendor fee rebate returned $56.5 million to small businesses across Colorado. By eliminating this credit, state legislators expect to generate $56.8 million in additional revenue to help balance the state budget.
Clay Hapke, a small business owner, expressed concerns about losing this financial support.
"We definitely would like that money....every year is kind of a tough budget," Hapke said.
The legislation states the fee removal aims to "promote fairness and equality between all retailers." Previously, only businesses with annual taxable sales under $1 million qualified for the vendor fee collection.
Erica Rose, another business owner questioned whether this approach serves local communities effectively.
"I think it's good to re evaluate so I'm not saying we shouldn't look at things…Let's just make sure these are the questions we're asking ourselves: Is this the most local positive? Is this pouring back into our community?”, she said.
"It's a lot of money, so yea, I'm not a fan of it," says Hapke.
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