Planning a kitchen update or finishing a basement in Monument? Before you order tile or cabinets, make sure you budget for use tax on your materials. It is a small line item that can change your total cost if you miss it. In this guide, you will learn what the Monument use tax is, how deposits work at permit time, and simple steps to estimate your full tax exposure with confidence. Let’s dive in.
Monument use tax, in plain English
Monument collects a local construction use tax on building materials for permitted projects. The Town’s local rate is 2.00%, and combined taxes on materials often include state and county portions. Town guidance shows a combined burden of 6.13% in many addresses and 7.13% where the Pikes Peak RTA applies. You can review the Town’s overview on the Taxation information page.
Permit-time deposits
When you apply for a building permit, Monument collects a use tax deposit in one of two ways:
- Your contractor declares 100% of materials and pays the Town’s 2.00% on that amount, or
- Your contractor uses the Town’s default proxy: 50% of the permit valuation is treated as materials, and the Town collects 2.00% on that estimate.
This deposit covers the Town’s portion at the start. Final taxes can change after reconciliation. See the Town’s process on the Taxation information page.
Why there is a reconciliation
After your project closes, the Town can reconcile the permit to your actual materials. Contractors must keep job cost reports, supplier receipts, and subcontractor affidavits to support adjustments or refunds. The Town explains record needs and refunds on its Taxation page.
Who pays and when
For permitted projects
Contractors are usually treated as the end consumers of materials and handle the tax through the permit process. The permit allows suppliers to avoid charging local sales tax at the register because the local tax is collected by the Town. This setup is standard across Colorado and is described in both state and local guidance, including an example from Arvada’s contractor rules on end-consumer treatment (Contractors overview).
For non-permitted work or homeowner purchases
If no permit is required, materials are taxed at the point of purchase as normal retail sales tax. If you buy materials yourself for a permitted job, present your permit at checkout so the vendor can apply the correct tax handling. The state explains how this works in the Consumer Use Tax Guide.
What counts as construction materials
“Construction materials” generally means items that become a permanent part of the home, such as lumber, drywall, roofing, plumbing parts, and similar supplies. Items that are not permanently affixed, like some appliances or freestanding furniture, may be treated differently. Local codes can draw the line in different places, as other Colorado cities note in their published guidance (example of local guidance).
- Tools, rented equipment, and temporary supplies are usually taxed as normal purchases because they do not become part of the structure.
- Keep all invoices so your contractor can categorize items correctly at reconciliation.
Budget your Monument remodel taxes
A quick estimate you can use
Here is a simple way to plan for use tax on a permitted project:
- Project valuation: $50,000
- Town’s 50% materials proxy: $25,000
- Permit deposit to Monument (local 2.00% on materials estimate): $25,000 × 2.00% = $500
- Total possible combined tax on materials at 6.13%: $25,000 × 6.13% = $1,532.50
- If your address is in the PPRTA area at 7.13%: $25,000 × 7.13% = $1,782.50
Bottom line: the permit-time deposit often covers only the Town’s portion. Your final materials tax can be higher once state and county pieces are included and reconciled. Rate context appears on Monument’s Taxation information page.
Step-by-step budgeting checklist
- Confirm the contractor’s method: full materials declaration or the 50% proxy.
- Set aside the permit deposit equal to 2.00% of declared or proxy materials.
- Estimate total exposure using the combined 6.13% or 7.13% materials rate to be conservative.
- Add a small contingency for reconciliation. A 1% to 2% buffer of total project value is a practical planning target.
- If you plan to buy any materials, present the permit at checkout so the vendor applies the correct tax handling, as described by the state’s Consumer Use Tax Guide.
Documentation to avoid surprises
Ask your contractor to keep job cost reports, supplier receipts, and subcontractor affidavits tied to your permit number. These records are essential for reconciliation and any refund request. Monument’s reconciliation expectations are outlined on the Taxation page.
Penalties, interest, and timing
Monument lists penalties of $15 or 10% of tax due, whichever is greater, and 1% interest per month until paid. Staying organized and paying on time will help you avoid these costs. You can review the Town’s details on the Taxation information page.
Special situations to note
PPRTA areas and address checks
Project addresses within the Pikes Peak RTA can see the combined materials rate rise to 7.13%. If you are not sure whether your home is in that area, verify jurisdiction boundaries and special district context with Monument and El Paso County’s resources, including the county’s sales tax information.
Exempt projects
Some public or qualifying nonprofit projects may be exempt under Colorado statute. Contractors should verify and keep documentation related to exemptions under C.R.S. §39-26-708.
Recent administrative updates
Monument began self-collecting sales tax in 2025. Always check the Town’s current instructions for filing and payments on the Taxation page.
Ready to remodel with clear numbers?
A little planning goes a long way. Confirm the contractor’s permit method, estimate your combined materials tax, and keep clean records. If you want a local perspective on which updates add the most value in Monument and how to coordinate improvements before selling, reach out to Robin Chambon for thoughtful, neighborly guidance.
FAQs
What is Monument’s use tax on remodels?
- Monument collects 2.00% on construction materials for permitted work, with total materials taxes often reaching 6.13% or 7.13% when state, county, and PPRTA components are included, per the Town’s guidance.
How is the permit deposit calculated in Monument?
- Contractors either declare 100% of materials and pay 2.00% on that amount or use the Town’s proxy where 50% of the permit valuation is treated as materials and taxed at 2.00%.
Who pays the tax if I buy materials myself?
- If you purchase directly and pay sales tax at checkout, you likely satisfied tax on that purchase, but present your permit so vendors apply the correct jurisdiction handling per the state’s guidance.
What is counted as construction materials for tax?
- Materials that become a permanent part of the home generally qualify, while tools, rentals, and some appliances are treated differently; local definitions can vary, so accurate receipts and categorization matter.
How does PPRTA impact my remodel budget?
- If your address is in the PPRTA area, the combined materials rate can reach 7.13%, so use that higher rate when estimating to be safe.
What happens after my project closes?
- The Town may reconcile your permit against actual materials, which can lead to additional payment or a refund; accurate job cost records help finalize this quickly.
