California Sales Tax Rate & Rules (2026)

Last updated: 2026-03-27

What is the sales tax rate in California?

What is taxable in California?

How do you register to collect sales tax in California?

What is the economic nexus threshold for California?

How to register for sales tax in California

Before you can collect sales tax, you need to register with the California Department of Tax and Fee Administration (CDTFA). Here is the step-by-step process.

1. Apply for a Seller's Permit online through the California Department of Tax and Fee Administration (CDTFA) at cdtfa.ca.gov — the permit is free, but a security deposit may be required based on estimated tax liability
2. Provide your FEIN or SSN, business entity details, and the address of each California location where you sell
3. You need a separate permit for each business location in California
4. Processing typically takes 1-2 weeks online; the CDTFA may contact you for additional information
5. Note: California's tax agency was formerly the Board of Equalization (BOE). The CDTFA took over sales tax administration in 2017. Some older resources may still reference the BOE.
6. Remote sellers exceeding the $500,000 economic nexus threshold must also register with the CDTFA

How to collect sales tax in California

Once registered, you are responsible for charging the correct amount of sales tax on every taxable transaction. Here is how the collection process works in California.

1. Determine whether each product or service is taxable — California taxes most tangible goods but exempts most groceries, prescription drugs, and digital goods/SaaS
2. Look up the correct district tax rate for each transaction using the CDTFA rate lookup tool at cdtfa.ca.gov/taxes-and-fees/sales-pitd.htm — California uses a unique district tax system where rates vary by address, not just city or county
3. California uses a hybrid sourcing method: the state rate (7.25%) and most district taxes are destination-based, but some older district taxes are origin-based
4. Charge sales tax at the point of sale and itemize it on receipts and invoices
5. Accept and verify California resale certificates (Form BOE-230) from buyers purchasing goods for resale
6. Keep detailed records of all transactions, district tax allocations, and exemption certificates for at least 4 years

How to file and remit sales tax in California

Filing your sales tax return on time is critical to avoid penalties. California requires electronic filing for most businesses.

1. Log in to the CDTFA online services portal at onlineservices.cdtfa.ca.gov to file your return
2. Filing frequency is assigned by the CDTFA: monthly (if tax liability exceeds $10,000/year), quarterly (most common for small businesses), or annually (if under $1,200/year)
3. Report gross sales, exempt and nontaxable sales, taxable sales, and district tax amounts — California requires you to allocate sales to specific district tax jurisdictions
4. Calculate tax using the CDTFA rate tables or online calculator — remember that rates can differ at the address level due to district taxes
5. Pay electronically by the last day of the month following the reporting period (e.g., Q1 return due April 30)
6. Retain all returns, worksheets, and records for at least 4 years as required by California law

What is exempt from California sales tax?

Not everything is subject to sales tax. California provides exemptions for certain products, buyers, and uses. Always verify the specific exemption requirements with the California Department of Tax and Fee Administration (CDTFA).

• •Sales for resale with a valid California resale certificate (Form BOE-230)
• •Most grocery food items (unprepared food for home consumption)
• •Prescription medications and certain medical devices
• •Sales to the U.S. government
• •Custom computer software and SaaS (digital goods delivered electronically are not taxable)
• •Manufacturing and R&D equipment (partial exemption of 3.9375% — you pay a reduced rate)
• •Agricultural feed, seed, and fertilizer
• •Occasional or casual sales (e.g., a one-time garage sale) in limited circumstances

What are the highest combined sales tax rates in California?

Because California allows local jurisdictions to add their own sales taxes on top of the state rate, combined rates vary by location. Here are some of the highest combined rates in major California cities.

What is use tax in California?

California use tax applies when you purchase taxable goods from out-of-state sellers who do not collect California sales tax. The use tax rate is the same as the sales tax rate for your location, including applicable district taxes. Businesses must self-assess and report use tax on their CDTFA sales tax return. Common examples include equipment purchased from out-of-state suppliers, online purchases shipped to California, and goods removed from inventory for personal use. Individual consumers can report use tax on their state income tax return or file a separate use tax return.

Does California have marketplace facilitator rules?

California requires marketplace facilitators (including Amazon, eBay, Etsy, and Walmart Marketplace) to collect and remit sales tax on behalf of third-party sellers for deliveries into California, provided the facilitator has more than $500,000 in California sales. If all your sales are through a qualifying marketplace, the facilitator handles the sales tax obligation. You remain responsible for collecting and remitting tax on any direct sales outside of the marketplace.

What are the penalties for sales tax non-compliance in California?

California charges a 10% penalty for late filing or late payment. Interest accrues on unpaid balances at a rate adjusted twice per year (typically 5-7%). If you fail to file, the CDTFA will estimate your tax liability and issue a Notice of Determination, adding additional penalties. A fraud penalty of 25% applies if underpayment is due to intentional misrepresentation. Criminal penalties for willful tax evasion include fines up to $20,000 and imprisonment. California also imposes a negligence penalty of 10% for careless or reckless reporting.

This is general information, not legal or tax advice. Tax rules change frequently — always verify with the official state agency. Sources: California Department of Tax and Fee Administration (CDTFA).