Total Range for 2025
| Base state sales tax rate | 6.00% | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate |
| Local rate range | 0.15%-3% | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate |
| Total rate range | 7.25%-10.25% | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate |
| Economic sales nexus threshold | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | |
| Transactions threshold | N/A | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate |
| Sales tax return filing due date | Last day of following month | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate | Base state sales tax rate |
The base state sales tax rate in California is 6%, but since there is a mandatory local rate of 1.25% local rates range from 0.15-3% the total sales tax range is 2.25-10.25%.
How to calculate your sales tax rate
Use our online sales tax calculator to determine the combined state and local sales tax rate for each location where you have a physical or economic nexus. Just enter your state and ZIP code to get your sales tax rate.
Example of using the sales tax rate in a tax calculation:
Your business resides in District A with a 0.50% rate.
- A buyer within your district purchases a $100 item. You charge 7.25% state tax + 0.50% district tax = 7.75% = $7.75 in tax.
- A buyer outside your district but still in California purchases a $100 item. You charge only the state tax = 7.25% = $7.25 in tax.
Nexus: Why do you need to collect sales tax in California?
If you’re selling goods and services in California then sales tax might apply! To determine your obligation, we need to understand “nexus,” which ties businesses to states for tax purposes.
Two types of nexus exist:
- Physical Nexus: Having a physical presence, like an office, warehouse, or employees in California, triggers this type. If you do, you likely need to collect sales tax.
- Economic Nexus: This kicks in when your sales within California exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.
Services
Most services in California are not taxable. However, there are some exceptions, such as:
- Services directly tied to the sale of taxable goods (e.g., installing software).
- Services related to the repair or maintenance of taxable personal property.
- Services like amusement or recreational activities.
Goods
Most tangible personal property is taxable in California. This includes most physical items you can buy or sell. There are some exemptions, e.g.:
- Groceries (excluding prepared food and hot beverages).
- Prescription drugs and medical devices.
Freight/Shipping
- Shipping charges are generally taxable if they are for the delivery of taxable goods unless they are when shown separately on the invoice.
- Shipping charges may be exempt if they are for the delivery of exempt goods or if the delivery is by a common carrier (e.g., USPS, FedEx).
Clothing
- Clothes in California are subject to sales tax unless you’re selling them to non-profit organizations
Electronics
- Electronics are subject to sales tax
SaaS
- Software-as-a-service (SaaS) is typically considered a service and is not taxable depending on the specific service provided.
Digital Products
- Sales of electronic data products like software, data, eBooks, mobile apps, and digital images are generally not taxable if transmitted over the internet.
- However, if the sale includes a printed copy or backup on a physical medium, the entire sale is usually taxable. Additionally, a local utility users tax may apply to streaming services.
Software
- Downloadable software is generally treated as tangible personal property and is taxable.
Check the California Department of Tax and Fee Administration (CDTFA) website for a detailed list of exempt and taxable services or consult a tax professional (like us!).
How to register for sales tax in California
If you’ve worked out that you do have a physical or economic nexus (or both), then the next step is to register for sales tax in the state. In California there are two ways to do this:
- Register online:
- Visit the CDTFA website
- Click on “Register” and then “Register a New Business Activity.”
- Complete the online application form, providing information about your business, product/services, and expected sales.
- Register by mail:
- Download the Application for Seller’s Permit (Form REG 250) from the CDTFA website.
- Complete the form and mail it to the address provided on the form.
How to collect sales tax in California
While collecting based on the buyer’s location (destination) is generally recommended, California’s “hybrid” system adds complexity for businesses with a physical presence in the state:
Hybrid System Breakdown:
- District Tax: This is an additional sales tax on top of the state rate (7.25%).
- Districts: Think of these as specific areas within California, like cities, counties, or special districts. Each district sets its own rate, ranging from 0.10% to 1.00%.
- Location Impact:
- One California location: You’ll charge two rates:
- Your district rate for buyers within your district.
- The state rate for buyers outside your district.
- Multiple California locations: Things get trickier. You might need to charge different rates depending on buyer locations and your various district presence.
- One California location: You’ll charge two rates:
How to get a sales tax permit/license in California?
To obtain a sales tax permit in California, start by registering online through the California Department of Tax and Fee Administration (CDTFA) website. Use the California Online Tax Application available on their website to complete your registration.
You will need to provide essential business information, including your business name, address, Federal Employer Identification Number (FEIN) or Social Security Number (SSN), and details about the business owners or officers. Complete the application for a California Seller’s Permit, which authorizes you to collect and remit sales tax on taxable sales within the state.
When are California’s sales tax returns due?
In California, sales tax returns are generally due on the 30th day of the month following the end of the reporting period. The frequency of filing—monthly, quarterly, or annually—depends on your sales volume:
- Monthly: If your total taxable sales exceed $100,000 annually, you must file monthly.
- Quarterly: If your total taxable sales are between $20,000 and $100,000 annually, you file quarterly.
- Annually: If your total taxable sales are less than $20,000 annually, you file annually.
If the due date falls on a weekend or holiday, the return is due on the next business day. It’s important to file on time to avoid penalties and interest.
Is anyone exempt from sales tax in California?
Yes, there are some exemptions from sales tax in California. Here are some examples:
Individuals:
- Groceries: Most unprepared food items are exempt, with some exceptions like prepared foods, hot beverages, and alcoholic beverages.
- Prescription drugs and medical devices: These are exempt from sales tax.
Businesses:
- Resale purchases: Businesses with a valid seller’s permit can purchase goods for resale tax-free.
- Manufacturing equipment: Some types of manufacturing equipment are exempt from sales tax.
- Agricultural products: Sales of agricultural products directly from farmers to consumers are exempt.
Organizations:
- Non-profit organizations: Qualified non-profit organizations are exempt from sales tax on purchases related to their exempt activities.
- Government agencies: Purchases made by government agencies are exempt from sales tax.
Do I Have to Collect Sales Tax from California Customers if I Sell on Amazon, Walmart, Ebay, or Etsy?
Yes.
Marketplaces like Amazon and Walmart must collect sales tax on behalf of third-party sellers, according to California tax law.
If you have a sales tax nexus in California, remember that you are still required to collect sales tax on your other non-marketplace Californian sales.
