California Sales Tax
California Sales Tax At a Glance
State rate: 7.5%
Maximum combined rate: 10.75%
Sourcing: Modified-Origin
Tax Holidays: None
Governing Body: California Board of Equalization / CA Department of Tax and Fee Administration
The total California sales tax rate varies by location. There is a state sales tax rate of 7.5%. Of the base state sales tax rate, the largest amount goes to the California general fund. Additional funds are allocated for public safety, health and social services, and transportation. The remainder goes to local jurisdictions such as cities and counties. A complete breakdown of the California tax rate can be found here.
Many places have additional local taxes. Some areas are special tax districts with additional local sales tax rates that have been approved by voters or local governments. Because multiple district taxes can apply to a single location, the combined total sales tax rate may have several different components. Each component rate must be added together to determine the total tax rate.
California has some of the highest sales tax rates in the United States. CA tax rates differ not just by county, but by California city as well.
California Sales Tax Rates
California (CA) Sales Tax Rate: 7.5%
Maximum rate for California cities: 10.75%
Determining California Sales Tax Nexus
Any business with a physical location in California has nexus, and is therefore required to register to collect sales taxes, and to file sales tax returns and pay sales tax to the state.
Other activities that create nexus include someone working for you who lives in the state, having California affiliates who advertise your products in exchange for commission when a sale is made from their affiliate link/marketing activities, or attending a trade show and making one or more sales at that show.
Retailers who sell on Amazon and use their Fulfillment by Amazon (FBA) program, will have a physical presence in California if any of their products are stored within a California FBA warehouse.
Finally, California, like most states, has an economic nexus tax laws that require out of state sellers to register and collect tax on orders shipped into the state. This is primarily aimed at taxing online sales, which are a significant component of retailer purchases.
Determining California Sales Tax Nexus for Out of State Sellers
Out of state sellers who do not have a physical presence in California may be required to collect and remit sales tax if they meet any of the following criteria:
- Affiliate Nexus – California requires businesses with ties to businesses or affiliates in the state to collect and remit sales tax. This could include developing or designing TPP that is distributed by a remote seller.
- Click Through Nexus – Those who direct traffic to a website for the purpose and intention of generating a sale establish Nexus for that business. Total referrals on sales of more than $10,000 within a year and total sales of $1,000,000 or more are required to establish click-through nexus.
- Economic Nexus – California’s economic nexus law requires businesses that sell $500,000 or more of TPP into the state directly or via a marketplace to register to collect sales tax. This also impacts in-state businesses based on the municipalities in which they operate.
What is Eligible for California Sales Tax
Sales tax applies to most goods (tangible personal property) purchased by consumers. Unprepared food is not taxable, nor are some medical devices, prescription medications, or sales to the US Government. California does not have any clothing tax exemptions or sales tax holidays.
Other taxable points to consider include:
- Services – Most services are not taxable by the state of California. Two exceptions are if the service is inseparable from the property being purchased (such as calibration of a machine being sold), or services related to the fabrication or manufacture of tangible personal property.
- Shipping charges on orders shipped via common carrier (such as UPS, FedEx, or USPS) are not taxable provided that they are stated separately on the invoice and that the amount charged to the customer is the same amount as charged by the carrier. If you charge the customer more than the actual cost charged by the carrier, the difference is taxable.
- Drop-shipping – Items that are drop-shipped from a California company on behalf of an out-of-state retailer who is not required to hold a California seller’s permit, should be taxed by the drop-shipper.
- Vehicles purchased outside the state are subject to the 12-month test. If the vehicle, vessel, or aircraft was purchased outside of California, first used outside the state, and then brought into California within 12 months of purchase, it is taxable (with certain restrictions).
Registration
How do I register for a California resale certificate?
Business owners must obtain a California seller’s permit if they are doing business in California. Out-of-state retailers with at least $500,000 in gross receipts to California purchases within the previous or current calendar year, must register, collect, and remit sales tax to California.
You can click here to register online for a seller’s permit or use tax account.
Filing
How do I file California sales and use tax returns?
Filing can be done online or via mail. You can use BOE’s free online filing option or you can choose to use a third-party service to file with any provider that has successfully completed the BOE acceptance testing and is authorized to receive returns and payment information. If filing online, you may pay through the Electronic Funds Transfer program (EFT), ACH Debit, ACH Credit through your own financial institution or make your payment separately.
The EFT payment program is mandatory if you have a California Seller’s Permit and average $10,000 in monthly payment or more, or you have a Special Taxes and Fees account and average monthly tax or fee payments of $20,000 or more. Other sellers can select this as a voluntary option.
Finally, there is a prepayment sales tax rate for motor vehicle fuel, diesel fuel, and aircraft jet fuel.
Deadlines
What are California’s sales tax deadlines?
When you first received your sales tax permit from the state of California, you were assigned a payment schedule. This schedule is either monthly, quarterly, or annually.
The following due dates apply to California sales tax returns. The due date is noted for each period for monthly, quarterly, and annual reporters. If a due date falls on a Saturday, Sunday, or legal holiday, then the return is due the following business day.
Monthly: Due the last day of the month following the reporting period month.
| Period | Due Date |
|---|---|
| January | February 28 (or Feb. 29 in a leap year) |
| February | March 31 |
| March | April 30 |
| April | May 31 |
| May | June 30 |
| June | July 31 |
| July | August 31 |
| August | September 30 |
| September | October 31 |
| October | November 30 |
| November | December 31 |
| December | January 31 |
Quarterly: April 30th, July 31st, October 31st and January 31st for prior quarter. (Prepayment returns are due on the 24th of the prior two months.)
| Period | Due Date |
|---|---|
| January – March (Q1) | April 30 |
| April – June (Q2) | July 31 |
| July – September (Q3) | October 31 |
| October – December (Q4) | January 31 |
Annual:
For Sales Tax Accounts: Due January 31st for prior year.
For Qualified Purchasers and Consumer Use Tax Accounts: April 15th.
Prepayment accounts file on the 24th of the first 2 months of each quarter.
| Period | Due Date |
|---|---|
| January – December | January 31 |
Amending Online Returns
How do I amend my California sales and use tax return?
There is no electronic method currently available to amend an online return. You must print the return and write the correct figures on the “Confirm Filing” page of the return filed online, then write “Amended Return” across the top. Submit via mail with any additional payment due or file a claim for refund or credit if you have overpaid. Mail documents to:
California Department of Tax and Fee Administration
Special Taxes and Fees
Appeals and Data Analysis Branch (MIC: 33)
PO Box 942879
Sacramento, CA 94279-0033
Penalties and Interest
Beginning the day after a sales tax return is due, penalties and interest will begin to accrue. These include:
- A 10 percent penalty if you do not file your tax return by its due date, and a 10 percent penalty if your tax payment is late, not to exceed a total of 10 percent.
- Interest based on the interest rate shown at the bottom of your return, for each month or partial month that the tax remains unpaid.
- A Collection Cost Recovery Fee (CRF) if taxes remain unpaid for more than 90 days past the due date, unless you enroll in and adhere to a payment plan.
For more details, see Publication 75 on the California Department of Tax and Fee Administration website.
Other things to note:
California collects sales tax for delivery with special tax districts and “engaged in business” locations. Generally, your customer is liable for the district use tax and you may collect it from them as a courtesy. Learn more details at District Taxes and Delivered Sales web page.
Resources:
- California State Tax Service Center
- Find Sales and Use Tax Rate by Address
- Sign up for updates for notices on tax rate changes, Tax Information Bulletins and more.
- Obtain a seller’s permit.
- Verify seller’s permit.
California Sales Tax Software
To accurately calculate and collect California sales tax on your website or other application, use our TaxTools product. It scrubs California addresses and finds the right sales tax rate for all orders shipping within the state of California, regardless of destination or product class. Configuring sales tax on your ecommerce store has never been easier. Click here to learn more, or register for a free trial of the TaxTools software.
You can also use our free California sales tax calculator to look up the rate for any California address.
Last updated January 2023