California Sales Tax

California Sales Tax At a Glance

State rate: 7.25%
Maximum combined rate: 9.75%
Sourcing: Modified-Origin
Tax Holidays: None
Governing Body: California Board of Equalization

California sales tax varies by location. There is a state sales tax as well as by local district taxes (counties and cities). Multiple district taxes can apply. California has a statewide sales tax rate of 7.25% PLUS some counties have voter- or local government-approved district taxes – also called special tax districts.

California Sales Tax Rates

California (CA) Sales Tax Rate: 7.25%
Maximum rate for local municipalities: 9.75%

Determining California Sales Tax Naxus

Any business with a physical location in California has nexus, and is therefore required to register to collect sales tax, 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 exhange for commission when a sale is made from their affiliate link/marketing activities, or attending a tradeshow 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.

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.

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?

Retailers must obtain a California seller’s permit if they are doing business in California. Out-of-state retailers with at least $100,000 in gross receipts from all locations (both within California and from other states or internationally) within a calendar year, must registered for a use tax account and collect/remit use tax on behalf of customers. THe use tax rate is the same as the sales tax rate.

You can click here to register online for a seller’s permit or use tax account. Alternatively, you can register in person at any of the Board of Equalization’s field offices.

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 complete the BOE acceptance testing and is authorized to receive returns and payment information. If filing online, you may pay through 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 firt 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.

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.)

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.

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:

Board of Equalization, MIC 35
PO Box 942879
Sacramento, CA 94279-0035

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 Board of Equalization 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:

• Retailers can find general information on California sales and use tax rates.
• 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.
• File online, including Express login.
• 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. Contact us for more information or register for a free trial of the TaxTools software.

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You can also use our free sales tax calculator to look up the rate for any California address.