Key takeaways
- California sales tax rates: The base rate is 7.25% (a 6% state rate plus a 1.25% mandatory local rate), and district taxes push combined rates to roughly 7.25%–10.75%.
- Economic nexus: Remote sellers must register once sales of tangible goods delivered into California exceed $500,000 in the current or previous calendar year. There is no transaction-count threshold, and marketplace sales count.
- Filing & penalties: Returns are generally due on the last day of the month after the reporting period. Late filing costs 10% of the tax due, and late payment 10% of the unpaid tax.
California sales tax key facts (2026)
| Item | California |
|---|---|
| Statewide base rate | 7.25% |
| Combined rate range | 7.25%–~10.75% (a few cities ~11.25%) |
| Economic nexus threshold | $500,000 (current or prior calendar year) |
| Transaction-count threshold | None |
| Sourcing | Modified origin (state/county/city) + destination (district) |
Collect and file California sales tax with Taxually: LumaTax monitors your nexus, registers you and files your returns.
Is SaaS taxable?
No.
| Item | California |
|---|---|
| Groceries | Exempt (hot/prepared food taxable) |
| Return due date | Last day of the month after the reporting period |
| Governing agency | CDTFA |
What is the sales tax rate in California?
California’s base sales tax rate is 7.25% (a 6% state rate plus a 1.25% mandatory local rate) — the highest statewide base in the country. Local district taxes (each 0.10%–2.00%) push combined rates to roughly 7.25%–10.75%, and a few cities such as Lancaster and Palmdale reach about 11.25%.
District rates change quarterly, so confirm the exact rate for a delivery address with the CDTFA rate lookup.
Do you have sales tax nexus in California?
Nexus is the connection that obligates your business to collect and remit California sales tax. You can establish it two ways — physically or economically. Either one is enough.
Physical nexus
You have physical nexus if you have a tangible presence in California, such as:
- A physical location such as an office or warehouse
- Employees or independent contractors in California
- Real or personal property leased or owned in the state
- Inventory stored in California (including 3PL or Amazon-FBA stock)
Economic nexus
Remote sellers establish economic nexus once total sales of tangible personal property delivered into California exceed $500,000 in the current or previous calendar year (AB 147). There is no transaction-count threshold, and the $500,000 includes marketplace sales.
If you sell only through a marketplace that collects on your behalf, you generally don’t have to register just for those sales — but if you also sell directly, the marketplace sales still count toward your threshold. California also has an affiliate/referral nexus rule (referral sales over $10,000 plus total California sales over $1,000,000 in the prior 12 months).
What is taxable in California?
Most tangible personal property is taxable; common exemptions include groceries, prescription medicine, and medical devices. Services are generally not taxable unless they create or fabricate tangible property. Note that prewritten software delivered on physical media is taxable, while electronically delivered software is not.
A separately stated delivery charge by common carrier or U.S. mail is generally not taxable (if it doesn’t exceed actual cost), but handling charges are taxable — combined shipping-and-handling needs care.
Is SaaS taxable in California?
No. California does not tax SaaS, electronic software downloads, or digital products such as e-books and streaming, because no tangible personal property changes hands.
How is food taxed in California?
Most unprepared groceries are exempt. Hot prepared food, food sold for on-site consumption, and carbonated/soft drinks are taxable. (Candy is generally treated as an exempt grocery in California.)
How to register for a California sales tax permit
You must register with the CDTFA for a seller’s permit before making taxable sales. Taxually can register for you, or you can apply online through CDTFA Online Services or at a field office. Registration is free, though a security deposit may be required in some cases.
Have ready: SSN and driver’s license number; email; FEIN and state employer ID; corporate details if applicable; contacts for partners/officers; supplier and bank details; merchant processor information; and your NAICS/SIC codes.
How to collect sales tax in California
California uses a modified origin system. In-state sellers apply the state, county, and city portions based on their own location, plus the district tax based on the buyer’s location. Out-of-state (remote) sellers apply the full destination rate, including all district taxes, for the buyer’s address.
Filing and paying California sales tax
The CDTFA assigns your filing frequency (monthly, quarterly, quarterly-prepay, fiscal-yearly, or yearly) by volume; most businesses file quarterly. Returns are generally due on the last day of the month following the reporting period (next business day if that’s a weekend or holiday), and you must file even a zero return.
If your liability exceeds $17,000 per month, the CDTFA puts you on a quarterly-prepay schedule with two prepayments due on the 24th of the first two months of the quarter. File and pay online through the CDTFA portal. Taxually’s software automates the whole process.
Penalties for late or non-compliant filing
Failing to file or pay on time triggers these penalties:
- Late filing: 10% of the tax due.
- Late payment: 10% of the unpaid tax.
- Interest accrues monthly at the CDTFA’s adjusted rate.
- A steeper penalty can apply if you collected tax from customers but failed to remit it.
Frequently asked questions
What is the sales tax rate in California in 2026?
The statewide base rate is 7.25%. With local district taxes, combined rates run roughly 7.25%–10.75%, and a few cities reach about 11.25%.
What is the economic nexus threshold for California?
$500,000 in sales of tangible personal property delivered into California in the current or previous calendar year. There is no transaction-count threshold, and marketplace sales count.
Is SaaS taxable in California?
No. California does not tax SaaS, electronic downloads, or digital products — only tangible personal property and a few specified items.
Are groceries taxed in California?
Most unprepared groceries are exempt. Hot prepared food and carbonated/soft drinks are taxable.
When are California sales tax returns due?
Generally the last day of the month following your reporting period; high-volume filers also make monthly prepayments under a quarterly-prepay schedule.
Automate Alaska sales tax compliance
.avif)
.avif)
