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CaliforniaSales Tax

A Complete Guide For Businesses

Automate My CaliforniaSales Tax Filings

State Rate
7.25%

Local Tax
yes

Phone
(800) 400-7115

General requirements

California is both an origin-based (sales are taxed where the seller is located for state, city, and county taxes) and destination-based (sales are taxed where the buyer is located for district taxes) state.

  • Sales tax is charged on the sale, use, storage, or consumption of tangible personal property (TPP) in California
  • Sales made for resale at retail are not taxed

Businesses may file online at the CDTFA website.

Rates

The state’s base sales tax rate is 7.25%. With additional local taxes, the combined total sales tax rate ranges from 7.25% to 10.25%.

How food is taxed

Grocery-type food items are generally tax exempt, while prepared foods are taxed at the full rate.

Nexus in California

Businesses establish a minimum tax connection to the state if any of the following apply:

  • Has employees or independent contractors in the state
  • Maintains an office, distributing house, salesroom, warehouse or other place of business
  • Leases out TPP that will be used in California
  • Owns or leases real property or personal property in California such as machinery, equipment and furniture including, but not limited to a computer server in California

Online activities that establish nexus in California include:

  • Having an affiliate or referral relationship with a contractor or representative in the state
  • Sales from these referrals exceed $10,000 during the prior 12 months
  • Total sales of TPP to purchasers in California exceed $1,000,000 during the prior 12 months

Find out more about nexus in California.

Filing schedule

Your filing frequency will be determined based on expected amount of taxable annual sales.

Due dates are as follows:

  • Annual filers: Returns are due on January 31, or July 31 for fiscal annual filers
  • Quarterly filers: Returns are due at the end of the month following the filing period (Quarterly prepay filers must also remit prepayments on non-filing months, which are due on the 24th of each non-filing month for the prior month's taxing period)
  • Monthly filers: Returns are due at the end of the month for the previous month

Registering to collect sales tax in California

New businesses must register online for a seller’s permit.

Penalties

The interest rate based on the rate charged by the IRS plus 3 percent applies to unpaid or underpaid taxes. Interest is calculated on a per-month basis. One month’s interest is charged for each month or fraction of a month that a payment is late. For example, if a payment is three days late, a full month’s interest is due.

Penalties are charged on late returns as follows:

  • A 10% penalty if you do not file your tax return by its due date
  • A 10% penalty if your tax payment is late

When you file a late return online, penalties and interest are automatically calculated.

See how easy it is to automate your sales tax filings.

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