California Use Tax Basics (Publication 110)
California's sales tax generally applies to the sale of merchandise, including vehicles, in the state. The state's use tax applies to the use, storage, or other consumption of those same kinds of items in California. While use tax was originally put in place to protect California merchants from unfair out-of-state competition, it also applies to certain purchases made within the state.
When does use tax apply?
Use tax generally applies when you buy merchandise that will be used, stored, consumed, or given away in this state, under certain circumstances.
Use tax is based on an item's purchase price and generally applies to:
- California consumer or retailer purchases from out-of-state vendors (including foreign merchants) who do not collect California tax on their sales (Please note, below) unless the purchase is otherwise subject to an exemption or exclusion.
- Retailer's use of items purchased under a resale certificate, including withdrawing items from inventory for personal or business use using: an item before sale, or using an item in manufacturing unless it becomes a physical part of the final product sold. Demonstrating or displaying an item is generally not a taxable use provided the item remains for sale.
- Purchases of vehicles, vessels, mobile homes, and aircraft from sellers who do not hold seller's permits. For more information, please refer to our related publications (see Additional Information), or call our Customer Service Center at 1-800-400-7115 (TTY:711), or our Consumer Use Tax Section at 1-916-445-9524.
Please note: Special use tax rules apply to purchases by insurance companies (see Regulation 1567, Banks and Insurance Companies) and to the use of heavy trucks and trailers (see Regulation 1661, Leases of Mobile Transportation Equipment).
Exemption for items purchased in a foreign country
The first $800 of merchandise or goods that is both purchased from a retailer in a foreign country by an individual, and personally hand–carried into this state from the foreign country within any 30-day period, is exempt from use tax. This exemption does not apply to property sent or shipped to this state.
Please note: This publication summarizes the law and applicable regulations in effect when the publication was written, as noted above. However, changes in the law or in regulations may have occurred since that time. If there is a conflict between the text in this publication and the law, the decision will be based on the law and not on this publication.
Revision June 2024