2024 Guide to State Sales Tax in California

What is sales tax in California?

California charges both a state sales tax and district sales tax. The sales tax rate in California will therefore vary depending on which tax district you’re purchasing an item or service in.

The total California sales tax rate a customer will pay is made up of two rates:

• A base California state sales tax of 7.25%
• Additional district California sales tax rates that range between 0.10% and 1%

However, there are some areas that have more than one district tax being charged and the amount of sales tax can vary within a city.

Here are some examples of the tax being charged in different locations:

• Alameda sales tax: 10.75%
• Anaheim sales tax: 7.75%
• San Francisco sales tax: 8.625%

Here are some examples of sales tax rates within the city of Los Angeles:

• Carson sales tax: 10.25%
• Cerritos: 9.5%
• Downey: 10%

Here are some examples from San Diego:

• Oceanside: 8.25%
• Escondido: 7.75%
• Solana Beach: 8.75%

California also has some sales tax exemptions or lower rates on certain goods and services.

Check out the California Department of Tax and Fee Administration website for more information or use the California sales tax rate lookup schedule to find rates in specific localities.

What is the California food tax?

The California food tax is a sales tax exemption on most food and grocery items purchases. However, there are some kinds of food items that don’t qualify for the California food tax exemption like carbonated drinks and prepared foods.

Examples of food that qualify for the California food tax exemption:

• Produce
• Meat, poultry, and fish
• Dairy products
• Breads and cereals
• Other foods
• Cold prepared food if taken to go

Examples of food that doesn’t qualify for the California food tax exemption:

• Prepared food sold hot
• Cold prepared food if eaten in the restaurant
• Carbonated drinks
• Alcoholic beverages
• Pet food
• Vitamins, medicine, supplements
• Cleaning products

See the page on the California food tax exemption for a more detailed breakdown of which food items qualify for the exemption and which do not.

What is California’s restaurant sales tax rate?

California treats food sold from restaurants differently based on how it’s sold and consumed.

Here are the rules you need to know:

1. Hot food is always taxable
2. Cold food is taxable if consumed at the restaurant
3. Cold food is not taxable if taken to go
4. Delivered food is taxable if hot
5. Delivered food is not taxable if cold
6. If a delivery contains both hot and cold items, only the hot items will be charged sales tax

The California restaurant tax rate is the same rate as California’s general sales tax. Restaurants charge the base CA state sales tax of 7.25% and add in the district sales tax rate on top of that.

What is California’s clothing sales tax?

California doesn’t currently have a lower or higher sales tax on clothing. However, while most clothing purchased in California is taxed at California’s normal state and local sales tax rates, there are some exemptions.

• Certain thrift stores are exempt from sales taxes in California (ex. Those operated by a qualifying nonprofit organization where the revenue is going to fund medical and social services to people with HIV or AIDS and military thrift stores located on a military base).

Learn more about the California clothing sales tax and other California sales tax exemptions.

What’s a taxable item according to CA sales tax laws?

In California, most types of goods where a physical product is transferred are taxable. Here are a few examples of tangible goods that you must charge CA sales tax on:

• Tangible personal property, unless specifically exempted
• Hot prepared food
• Clothing

See the California State Sales Tax page for more information.

What are non-taxable items according to CA sales tax rules?

California has a significant number of sales tax exemptions – and many of the state’s sales tax exemptions are unique or rare. Here are a few examples of non-taxable items that you don’t need to charge CA sales tax on:

• Most groceries
• Cold prepared food items
• Candy
• Diapers
• Menstrual hygiene products
• Some magazines and periodicals
• Purchases with CalFresh benefits
• Prescription medication
• Medical devices
• Some services
• Gas, electricity, water or steam (if delivered through mains, lines, or pipes)
• Software as a service (SaaS) is not taxable in California because there is no transfer of tangible personal property.
• Digital goods (same reasoning as SaaS)

California also exempts certain types of organizations from California sales taxes like government agencies, museums, and some non-profits via exemption certificates.

See the State of California Sales Tax page for more information.

When do I need to collect sales tax in CA?

If you are a remote or ecommerce seller, you might be required by law to collect and file sales tax in California if or when your business achieves California sales tax nexus.

You can achieve California nexus in two ways:

California physical nexus

In this situation, California physical nexus is achieved because a business has a type of physical presence in the State of California. See below for details on what conditions qualify for physical nexus in California.

California economic nexus

California economic nexus is achieved when a business makes $500,000 in eligible sales in a year in the state.

What is California’s physical nexus threshold?

Certain business activities create a physical nexus in California. If you have physical nexus, you are required to collect and remit sales tax on all taxable sales that are shipped to California.

Examples of business activities that can create physical nexus in California include:

• Physical location (office, distribution center, sale room, warehouse, storage place or other place of business).
• An affiliate, meaning your business (even if out of state) has ties to business affiliates in the state that engage in specified operations.
• A person working for you or your business, including a salesperson, agent, representative, etc.
• You rent or lease tangible personal property to someone in California.

Learn more about physical nexus in California on the California Department of Tax and Fee Administration website.

What is the California economic nexus threshold?

California recognizes economic nexus for any vendor that makes total sales of tangible personal property for delivery in the state of more than $500,000 during the current or prior year. Once you have economic nexus established, you will be obligated to collect sales tax from buyers in the state.

• Wholesale sales of tangible personal property must be included.
• A marketplace sellers’ sales through a qualifying marketplace provider are not included.
• Once you exceed the threshold, your registration and collection obligation begins immediately.

Learn more about California economic nexus thresholds.

How does California work with marketplaces?

Marketplaces in California are required to collect, report, and pay the tax on sales via their marketplaces. Marketplace sellers are, therefore, not required to pay taxes on what they sell through a marketplace.

Here are some special rules that apply to marketplaces in California:

• Taxable and nontaxable sales are counted towards a marketplace facilitator’s economic nexus
• Marketplace sellers must count the sales made through marketplaces towards their economic nexus even if they don’t have to pay taxes on those sales
• Marketplace sellers are not required to register or economic nexus if all their sales are made via a marketplace

See California’s marketplace sellers and facilitators’ guide.

Selling online in California?

Achieved California nexus? Wondering what’s next? If you want help figuring out how much California sales tax to charge in different localities or with remitting your taxes, TaxCloud can help your business remain sales tax compliant. With TaxCloud you can automate collecting sales tax in your ecommerce store, as well as filing manual sales tax returns. We help over 4,000 customers remain sales tax compliant and save hundreds of hours a year through sales tax automation.

Contact us to get started.

Are there any California sales tax holidays in 2024?

There are no annual California sales tax holidays and no special California sales tax holidays planned in 2024. Here are some other states that will have sales tax holidays in 2024 that you should know about.

Is California a Streamlined Sales Tax (SST) member?

Currently, California is not a full or associate member of the Streamlined Sales Tax Governing Board (SSTGB).

How do I register for a California sales tax permit?

Once you meet the requirements for California nexus, you’ll need to register for a California sales tax permit on the California Department of Tax and Fees website.

It’s free to register and all you need to do is answer questions about your business activities and the system will identify which permits you need. You can save the application at any time and come back to it later.