Publication 61, Sales and Use Taxes: Tax Expenditures Fiscal Year 2023–24
Tax Expenditures: Industry Benefit
Tax Expenditures That Benefit Various Industry Groups
Transportation Related Industry
Public Passenger Transportation Vehicles, Sale or Lease By Department of Transportation
The Department of Transportation is a consumer of, rather than a retailer of passenger transportation vehicles, including but not limited to, rail passenger cars, locomotives, other rail vehicles, bus and van fleets, and ferryboats, which it sells and leases back according to a certain type of safe harbor lease.
Vessels
Sales of vessels of more than 1,000 tons burden are exempt from tax if sold by the builder.
Motor Vehicle Fuel
Tax does not apply to the sale or use of motor vehicle fuel (except aircraft jet fuel) used in propelling aircraft if such fuel is subject to the Motor Vehicle Fuel Tax.
Fuel Sold to Air Common Carriers
Sales of fuel and petroleum products are exempt from sales tax when sold for immediate consumption by an air common carrier on a flight that has a final destination at a point outside the United States. to qualify for this exemption, the air common carrier must furnish the seller with a properly executed exemption certificate.
Hot Prepared Food Sold to Air Carriers
Sales of hot prepared food products to airlines and sales to passengers by such airlines engaged in interstate or foreign commerce are exempt from tax.
Aircraft and Component Parts Sales: Common Carriers, Foreign Governments, Nonresidents
Sales of aircraft to common carriers, to foreign governments for use outside California, and to nonresidents of this state who make no use of the aircraft in this state except to remove it, are exempt from tax. Only usage during the first twelve months is considered to determine if the transaction qualifies for exemption as a sale to a common carrier. In addition, the sale and use of property becoming a component part of such aircraft as a result of the maintenance, repair, overhaul, or improvement of that aircraft in compliance with Federal Aviation Administration requirements, and any charges made for the labor and services rendered with respect to that maintenance, repair, overhaul, or improvement are exempt from tax.
Aircraft Leases and Component Parts: Common Carriers, Foreign Governments, Nonresidents
The sale of an aircraft is exempt if leased to lessees using the aircraft as common carriers, or to any foreign government as lessees who use the aircraft outside California, or leased to lessees who are not residents of this state who will not use the aircraft in this state except for removal. In addition, the sale of property to an aircraft manufacturer is exempt if the property is incorporated into aircraft to be leased by the manufacturer to such people or entities. Also, the sale and use of property becoming a component part of such aircraft as a result of the maintenance, repair, overhaul, or improvement of that aircraft in compliance with Federal Aviation Administration requirements, and any charges made for the labor and services rendered with respect to that maintenance, repair, overhaul, or improvement are exempt from tax.
Ground Control Stations
The sale of a ground control station, as defined, to any foreign government for use by that government outside California or to any person who is not a California resident and who will not use that ground control station in California other than in removing it outside this state is exempt from tax.
New Vehicles, Foreign Resident
The sale of a new motor vehicle manufactured in the United States and sold to a resident of a foreign country who arranged for the purchase through an authorized vehicle dealer in the foreign country prior to arriving in the United States is exempt from tax, provided 1) the purchaser is issued an in-transit permit according to the Vehicle Code, and 2) prior to the expiration of the permit, the retailer ships or drives the vehicle to a point outside the United States by the retailer’s facilities or by delivery to a carrier, customs broker or forwarding agent for shipment to that point.
Watercraft
The sale, use, or lease of watercraft and component parts thereof sold or leased for use in interstate or foreign commerce involving the transportation of people or property for hire, or for use in commercial deep-sea fishing outside California’s territorial waters, or is functionally used 80 percent (80%) or more of the time in the transporting for hire of property or people to vessels or offshore drilling platform outside California’s territorial waters, is exempt from tax. Only the operational use, excluding storage or repair, during the first twelve months is considered to determine if the exemption applies. Usage of the watercraft after the first twelve months does not affect the exemption.
Rail Freight Cars
The sale or lease of rail freight cars used in interstate or foreign commerce is exempt from tax.
Public Passenger Transportation Vehicles, Purchased By Government Entities
The sale and purchase of public passenger transportation vehicles when purchased by a transit authority, special district, or governmental entity at the end of a lease or sublease according to any exercise of a purchase option under the lease or sublease are exempt from sales and use tax under specified conditions.
Common Carriers
Sales of tangible personal property, other than fuel and petroleum products, to a common carrier for use in its business as a common carrier are exempt from tax when the seller ships the property to a destination outside California by the facilities of the purchasing common carrier under a bill of lading, and the purchasing common carrier makes no use of the property until after delivery to the out-of- state destination. The seller must accept and retain an exemption certificate from the purchasing carrier. The same exemption applies to sales to foreign common carriers for use in their business as common carriers after the delivery to the first foreign destination. An exemption certificate is also required for this exemption, but a bill of lading is not.
Water Common Carriers
Until January 1, 2029, the sale of fuel and petroleum products is exempt from sales tax when sold to a water common carrier for immediate shipment outside this state for consumption in the conduct of its business as a common carrier after its first out-of-state destination. to qualify for the exemption, the common carrier must furnish the seller a properly executed exemption certificate.
New Vehicles, Out-of-State Dealer
The sale of a new truck or trailer with an unladen weight of 6,000 pounds or more, or a new trailer coach or auxiliary dolly, purchased from an out-of-state dealer for use outside California is exempt from sales tax if the property is delivered to the purchaser in California by the manufacturer, and the purchaser removes such vehicle out of state within 30 days.
New, Used, or Remanufactured Truck or New, Used, or Remanufactured Trailers, Interstate or Out-of-State Use
Until January 1, 2029, the sale of a new, used, or remanufactured truck or new, used, or remanufactured trailer or semitrailer, either of which has an unladen weight of 6,000 pounds or more and that has been manufactured or remanufactured outside of this state, which is purchased for use outside California, or for use exclusively in interstate or foreign commerce, or both, but delivered to the purchaser inside this state is exempt from tax if the vehicle is manufactured outside this state and the purchaser removes the property from California within 30 days of delivery, or the vehicle is manufactured in California and the purchaser removes the vehicle from California within 75 days of delivery.
Trailers or Semi-Trailers, New or Used
When a new or used trailer or semi-trailer is moved or operated laden of those trailers or semitrailers in accordance with a one-trip permit issued according to Vehicle Code section 4003.5, the use is exempt from use tax.
Component Parts of Railroad Equipment
When component parts of any railroad equipment that is owned or used by a common carrier engaged in interstate or foreign commerce are purchased outside this state in the course of repairing, cleaning, altering, or improving that railroad equipment outside this state, the use is exempt from use tax. In addition, any related charges for labor or services rendered outside this state in the course of repairing, cleaning, altering, or improving that railroad equipment are also exempt from use tax.
Entertainment Industry
Art Transferred for Entertainment
For sales and use tax purposes, “sale” and “purchase” do not include transfers of original drawings, sketches, illustrations, or paintings by an artist or designer at a social gathering for entertainment purposes if all of the following conditions are met:
- Eighty percent (80%) or more of the drawings, sketches, illustrations, or paintings are delivered by the artist or designer to someone other than the purchaser.
- Eighty percent (80%) or more of the drawings, sketches, illustrations, or paintings are delivered by the artist or designer to someone other than the purchaser.
- Eighty percent (80%) or more of the drawings, sketches, illustrations, or paintings are provided to someone other than the purchaser, at no cost to the person who becomes the owner of the drawings or sketches.
- The charge for the drawings, sketches, illustrations, or paintings is based on a preset fee, and that fee is contingent upon a minimum number of at least three drawings, sketches, illustrations, or paintings to be created by the artist or designer at the social gathering.
Motion Picture Production Partnerships
When certain people form partnerships to reduce the cost of producing motion pictures through sharing of equipment and other assets, the furnishing of such property, without the transfer of title, by the partnership to its members for the purpose of producing motion pictures does not constitute a “sale.” The partnership is the consumer of any such property.
Lease of Motion Picture and Television Films and Tapes
Leases of motion pictures, animated motion pictures, and television films and tapes (except video cassettes, tapes, and discs leased for private use under which the lessee does not obtain the right to license or broadcast) do not constitute sales. The lessor is the consumer of such tangible personal property it leases.
Qualified Motion Pictures and Qualified Production Services
For sales and use tax purposes, “sale” and “purchase” do not include the following: (1) any transfer of any qualified motion picture or any interest or rights therein when the transfer is prior to the date that the qualified motion picture is exhibited or broadcast to its general audience, and (2) the performance of qualified production services, as defined, in connection with the production of any qualified motion picture, as defined.
Master Records and Tapes
The sale or lease of master records or tapes is exempt from tax except for the actual tangible personal property physically incorporated and sold.
Teleproduction and Post-Production Equipment
The sale or use of teleproduction and postproduction equipment to businesses primarily engaged in teleproduction and post-production activities (as described in code 512191 of the North American Industry Classification System Manual) is exempt from five percent (5%) of the sales and use tax rate when that property is used 50 percent (50%) or more in those activities, subject to specified conditions.
Film and Television Tax Credit Program
The California Film & Television Tax Credit Program provides tax credits to qualified taxpayers based on “qualified expenditures” for qualified productions filmed in California. A qualified taxpayer allowed this tax credit may, in lieu of claiming the tax credit, make an irrevocable election to apply the tax credit against qualified sales and use taxes imposed on the qualified taxpayer.
Petroleum Industry
Fungible Goods
When property purchased for resale is commingled with property not purchased for resale so that specific property can no longer be identified, sales from that commingled property will be considered sales of property purchased for resale until the quantity sold equals the quantity purchased for resale. Also, property withdrawn from such a commingled inventory for use is considered to be from property not purchased for resale until the quantity consumed equals the quantity not purchased for resale. Therefore, a person who self-produces property and also purchases similar property for resale will not be required to pay use tax if the quantity of such property the person uses does not exceed the quantity self-produced (except with respect to the cost of any raw materials purchased for resale using the same method of reporting). Without specific legislation, such withdrawal of property for use would be taxed on a proration basis. The petroleum industry is the main beneficiary of this provision, but producers of steel rebar, quarry rock, and other self-produced property also benefit.
Manufactured Housing and Buildings
Leases of Mobilehomes
A lease of a mobilehome is not a taxable lease if the mobilehome is subject to property taxation.
Used Mobilehomes
When a used mobilehome that is subject to vehicle license fees is sold between private parties, or in a brokerage transaction, tax applies to the retail value of the used mobilehome as determined in accordance with an approved value guide, or the actual sales price, whichever is less.
Factory-Built School Buildings
“Gross receipts” and “sales price” do not include 60 percent (60%) of the sales price of factory-built school building to the consumer.
Factory-Built Housing
”Gross receipts” and “sales price” do not include 60 percent (60%) of the sales price of factory-built housing to the consumer.
New Mobilehomes
“Gross receipts” and “sales price” do not include 25 percent (25%) of the sales price of a new mobilehome sold to the retailer if the mobilehome is installed for occupancy as a residence and the mobilehome is thereafter subject to real property taxation. The subsequent sale of a mobilehome that qualified for this special treatment is exempt.
Used Mobilehomes Subject to Property Tax
The sale and use of a used mobilehome is exempt from tax if, at the time of sale, the mobilehome is subject to local property tax.
Used Floating Homes
The sale and use of used floating homes, as defined, subject to local property taxation whether sold in a private party transaction or by a retailer is exempt from tax.
Leasing Industry
Leases of Mobile Transportation Equipment
Certain property such as trucks (except “one-way rental trucks”), aircraft, and large vessels are classified as mobile transportation equipment (MTE). The lease of MTE is never a sale, and a person who purchases MTE for purposes of leasing is always the consumer of the MTE. However, a person who purchases MTE solely for purposes of leasing may elect to pay tax on the fair rental value of such MTE if the election is made timely. If the lessor makes such an election rather than paying tax on the purchase price, tax is due on the fair rental value whether the property is inside or outside California.
Leases of Property Purchased Tax-Paid
When California tax or tax reimbursement is timely paid on the purchase price of tangible personal property and the property is leased in substantially the same form as acquired by the lessor, the lease receipts are not taxable. In addition, leases of property acquired in a transfer of substantially all assets of a business when ownership remains substantially the same, and leases of property acquired by will or the laws of succession, are not taxable if the previous owner timely paid California tax or tax reimbursement on the original purchase price and the property is leased in substantially the same form as acquired by the previous owner. People that acquire property to be leased without payment of tax or tax reimbursement measured by the purchase price may elect to report tax on cost. If they do not make a timely election to report tax on cost, tax will be due on the rentals.
Rentals of Linen Supplies
Leases of linen supplies and similar articles, when an essential part of the lease agreement is the furnishing of the recurring service of laundering or cleaning the articles, do not constitute sales. The lessor of linen supplies and similar articles who furnishes the recurring service of laundering or cleaning such linen supplies and similar articles is the consumer of such tangible personal property and tax applies to their purchase of such items.
Lease, Certain Property Excluded
“Lease” does not include use (per statute) of property for less than one day for a charge of less than 20 dollars ($20) when the privilege of use is restricted to the premises or other business location of the grantor of use. Examples of such property are pool tables, coin-operated amusement devices, and golf carts. The grantor of such use is the consumer of the property.
Mass Commuting Vehicles
“Sale” and “purchase” do not include any transfer of qualified mass commuting vehicles such as a bus, subway car, rail car, or similar equipment, according to certain safe harbor lease arrangements.
Sale and Leaseback Arrangements
For sales and use tax purposes, “sale” and “purchase” neither include any transfer of title to, nor any lease of, tangible personal property according to an acquisition sale and leaseback. An acquisition sale and leaseback is a sale by a person and leaseback to that person of tangible personal property where (1) that person has paid California sales tax reimbursement or use tax with respect to that person’s purchase of the property, and (2) the acquisition sale and leaseback is consummated within 90 days of that person’s first functional use of the property.
Leases of Property Acquired In an Occasional Sale
The lease of property acquired in an exempt occasional sale, other than MTE, is generally a taxable continuing sale. The lessor, however, may instead elect to report tax measured by its purchase price. For property acquired in the transfer of substantially all assets of a business with substantially similar ownership, the purchase price for this purpose is considered the same as the purchase price of the original purchaser.
Vehicles Sold to Lessee
Normally the sale of a vehicle by a lessor to a lessee is subject to tax. However, it is rebuttably presumed that if the lessee transfers the vehicle to a third party within ten (10) days from the date the lessee acquired title from the lessor at the lease termination, the sale by the lessor is a nontaxable sale for resale, and no tax would be due for the interim ten-day period.
Rental Receipts Subject to Use Tax or From Property Outside State
Rentals payable under a lease of tangible personal property are exempt from sales tax when the rental receipts are required to be included in the measure of use tax or where the rental property is located outside this state. The exemption does not apply to leases of MTE, with respect to which a lessor who has elected to pay tax on the fair rental value must report and pay tax on that basis whether MTE is inside or outside this state.
Other Industry or General Business Tax Expenditures
Occasional Sale of Business
A person’s sale of all or substantially all its tangible personal property is exempt from tax provided that after the sale the real or ultimate ownership of the property is substantially similar to that which existed before the sale. “Substantially all the property” means 80 percent (80%) or more of all the tangible personal property, whether inside or outside this state, which is held or used in the course of any activities of that person which require the holding of a seller’s permit, or which would require the holding of a seller’s permit if the activities were conducted in this state. The real or ultimate ownership is “substantially similar” to that which existed before the sale if 80 percent (80%) or more of the ownership of the tangible personal property is unchanged after the transfer. For purposes of this exemption only, stockholders, bondholders, partners, or other people holding an ownership interest rather than a security interest in the corporation or other entity are regarded as having the real or ultimate ownership of the property of the corporation or other entity.
Hay Producers
Tax does not apply to the final sale of tangible personal property, other than hay, by producers of hay, provided the sale is not one of a series of sales sufficient in number, scope or character to constitute an activity for which the producer would be required to hold a seller’s permit if the producer was not also selling hay.
Storage and Use Exclusion
The keeping or retention of property for sale in the regular course of business is not a use. In addition, the keeping or retention of property for purpose of subsequent transportation outside California for use solely outside the state is not a use. Therefore, no tax applies with respect to property purchased outside California and brought into the state solely for subsequent transportation to an out-of-state point for use thereafter by the purchaser solely outside California.
Printing Materials
The fabrication or transfer by a typographer of composed type or reproduction proofs for use in preparing printed matter is excluded from the definition of a “sale” and “purchase.” Also, the fabrication or transfer of such reproduction proofs or impressed mats is not subject to tax when the fabrication is for, or the transfer is to, a printer or publisher for use in printing.
Custom Computer Programs
The transfer of custom computer programs, other than a basic operational program, and separate charges for custom modifications to existing prewritten programs are excluded from the definition of a “sale” and “purchase.”
Pawnbrokers
Until January 1, 2027, a pawnbroker’s receipts derived from a transaction where customers buy back their property after defaulting on a loan are excluded from the computation of sales or use tax under specified conditions.
Pet Adoptions and Related Services
For sales and use tax purposes, “sale” and “purchase” do not include transfers by a city, city and county, county, or other local government animal shelter or nonprofit animal welfare organization of any animal to an individual for use as a pet, or any charges made by the government shelter or nonprofit organization for services in connection with the transfer of that animal, including, the spaying or neutering or future spaying or neutering of the animal, or any vaccination, future vaccination, or similar service. This exclusion applies only to transfers of pets by organizations that are formed and operated for the primary purpose of prevention of abuse, neglect, or exploitation of animals, and qualify for an exemption from income tax according to Revenue and Taxation Code section 23701(d).
Excise Tax on Fuel
Sales tax does not apply to the federal excise tax on diesel fuel or aviation fuel when the purchaser certifies that they are entitled to either a direct refund or credit against their income tax for the federal excise tax paid.
Transportation of Landfill
The amount charged for transporting landfill from an excavation site to a site specified by a purchaser is not subject to sales and use tax if (1) the charge is separately stated and is reasonable, or (2) the entire amount charged relates to transportation.
Consumer Cooperatives
Tax does not apply to membership fees or labor performed in lieu of such fees, for organizations engaged in business for the mutual benefit of its shareholders, and which are composed of ultimate producers or consumers. Certain other restrictions apply.
Veterinarians
Licensed veterinarians are generally consumers of, rather than retailers of, drugs and medicines which they use or furnish in the performance of their professional services.
Alterations of Garments
A person who receives at least 75 percent (75%) of their total gross receipts from garment cleaning or dyeing services and no more than 20 percent (20%) of their total gross receipts from altering garments during the preceding calendar year is a consumer of tangible personal property which they will use or furnish in altering new or used clothing in the following year. Sales tax does not apply to charges for those alterations.
Lender Worthless Accounts
A retailer is relieved of liability for sales tax insofar as the measure is represented by accounts that have been found to be worthless and charged off for income tax purposes. Until January 1, 2025, under certain circumstances, lenders are entitled to a deduction or refund of the tax the retailer has previously paid. If any such accounts are thereafter collected in whole or in part, the lender must pay tax on the amount so collected. Special rules also apply to assignees of accounts receivable.
Retailer Worthless Accounts
A retailer is relieved from sales tax liability for accounts found worthless and which are charged off for income tax purposes. If any such accounts are thereafter collected in whole or in part, the retailer must pay tax on the amount so collected. Special rules also apply to assignees of accounts receivable.
Demonstration and Display
A purchaser may retain, demonstrate, and display property without incurring liability for tax, as long as the property is being held for sale in the regular course of business.
Loans to Customers
A person will not owe use tax on that person’s full purchase price of property loaned to customers as an accommodation while the customers’ property is being repaired or while the customers await delivery of property they have purchased, provided the loaned property is held for resale and is returned to resale inventory after the loan. The person will instead owe tax on the fair rental value of the loaned property for the period of the loan.
Use of Property Held For Sale
If a person uses property frequently for demonstration and display while holding it for sale in the regular course of business and uses it partly for other purposes, the person owes tax on the fair rental value of the property for the period of such other use.
Vehicles, Substantially Same Ownership
Sales of vehicles (including certain mobilehomes and commercial coaches), vessels, and aircraft as part of the sale of all or substantially all the assets of a business (whether those assets are inside or outside this state) when the ownership of the property remains substantially similar to that which existed before the sale are exempt from tax.
California Gold Medallions
The sale or use of commemorative “California Gold” medallions is exempt from sales and use tax.
Monetized and Nonmonetized Bullion and Numismatic Coins
Sales in bulk (single transaction with market value of $2,000 or more beginning July 1, 2023, subject to adjustment based on inflation) of monetized bullion, nonmonetized gold or silver bullion, and numismatic coins that are substantially equivalent to transactions in securities or commodities are exempt from sales and use tax.
Farm Equipment and Machinery
Sales and purchases of farm equipment, machinery, and their parts are exempt from five percent (5%) of the sales and use tax when purchased for use by qualified people who are engaged in the business of producing and harvesting agricultural products, as identified in the Standard Industrial Classification Manual, or when sold to qualified people who assist those so identified.
Timber Harvesting Equipment
Sales and purchases of equipment, machinery, and their parts designed primarily for off-road use in commercial timber harvesting are exempt from five percent (5%) of the sales and use tax when sold to or purchased by a qualified person engaged in commercial timber harvesting operations.
Diesel Fuel Used In Farming Activities and Food Processing
Sales and purchases of diesel fuel are exempt from five percent (5%) of the sales and use tax rate when that fuel is consumed during the activities of a farming business (as set forth in Internal Revenue Code 263A) or food processing. Farming business activities include transporting farm products to the marketplace.
Gasoline
The sale and purchase of gasoline is exempt from five percent (5%) of the sales and use tax rate.
Poultry Litter
The sale and use of wood shavings, sawdust, rice hulls, or other products used as litter in poultry and egg production and ultimately resold or incorporated into fertilizer products are exempt from sales and use tax.
Racehorse Breeding Stock
Sales and purchases of racehorse breeding stock are exempt from five percent (5%) of the sales and use tax rate. “Racehorse breeding stock” means a horse that is capable of reproduction and for which the purchaser states their sole intent to use the horse for breeding purposes.
Ice or Dry Ice
The sale of ice or dry ice used in packing and shipping or transporting food products for human consumption is exempt from the sales and use tax when the food products are shipped or transported in intrastate, interstate, or foreign commerce by common carriers, contract carriers, or proprietary carriers.
Carbon Dioxide
The sale of carbon dioxide is exempt from sales tax when it is used in packing and shipping or transporting fruits and vegetables for human consumption when those fruits and vegetables are not sold to the ultimate consumer in a package containing the carbon dioxide. The sale of any nonreturnable materials used to contain the qualifying carbon dioxide atmosphere are also exempt from sales tax.
Newspapers and Periodicals
The sale of newspapers and periodicals distributed without charge and regularly issued at average intervals not exceeding three (3) months, including component parts and ingredients thereof, are exempt from tax.
Periodicals
Sales of tangible personal property that becomes an ingredient or a component part of any periodical regularly issued at average intervals not exceeding three (3) months, and any periodical sold by subscription and delivered by mail or common carrier, are exempt from tax. A periodical is defined as any publication that appears at stated intervals at least four (4) times per year, but not more than 60 times per year, that contains news of interest to the public or other organization, and that meets other specified conditions.
Newspapers and Periodicals/Nonprofit organizations
The sale of newspapers or periodicals issued at average intervals not exceeding three (3) months which are published or purchased by specified nonprofit organizations are exempt from tax when those newspapers and periodicals: are distributed to the members of an Internal Revenue Code (IRC) Section 501(c)(3) organization in consideration of payment of the organization’s membership fee, or to the organization’s contributors; are published by an IRC Section 501(c)(3) organization that does not receive revenue from or accept any commercial advertising; or, are distributed by any nonprofit organization which distributes the publications to any member of the nonprofit organization in consideration, in whole or in part, of payment of the organization’s membership fee, where the cost of printing the newspaper or periodical to the nonprofit organization is less than ten percent (10%) of the membership fee attributable to the period for which the newspaper or periodical is distributed.
Containers
The sale or use of the following containers are exempt from tax:
- Nonreturnable containers when sold to people who place the contents in such containers for subsequent sale.
- Containers when sold with contents whose sale is exempt from tax.
- Returnable containers when sold with the contents or when resold for refilling.
- Any container, when sold without the contents to people who place food products for human consumption in the container for shipment, provided the food products will be sold, whether in the same container or not, and whether the food products are remanufactured or repackaged prior to sale.
Items such as twine, gummed tape, and wrapping materials are considered included in the term “container.”
Manufacturing, and Research and Development Equipment
Beginning July 1, 2014, and before July 1, 2030, sales, purchases, and leases of manufacturing and research and development equipment are exempt from 3.9375 percent (3.9375%) of the sales and use tax rate when sold to or purchased by qualifying manufacturers and certain researchers and developers for use primarily in manufacturing or research and development activities.
Electric Power Generation and Distribution Equipment
Beginning January 1, 2018, and before July 1, 2030, sales, purchases, and leases of electric power generation and distribution equipment are exempt from 3.9375 percent (3.9375%) of the sales and use tax rate when sold to or purchased by certain qualifying electric power generators or distributors for use primarily in electric power generation or production, or storage and distribution activities.
Printed Sales Messages
The sale and use of printed material consisting substantially of sales messages for goods and services are exempt from sales and use tax if the material is (1) printed to the special order of the purchaser, (2) mailed or delivered by the seller, the seller’s agent, or a mailing house, acting as the agent for the purchaser, through the United States Postal Service or by common carrier, and (3) delivered to any other person at no cost to that person who becomes the owner of the printed material.
Mailing Lists
The sale or use of mailing lists are exempt from tax if the contract restricts the use of the mailing list by the purchaser to a single use. Mailing lists include written or printed list, series, set, group, or aggregation of names and addresses of, and occasionally, other information concerning people, including, but not limited to, potential customers or donors, that is intended for use in circulating material by mail including a magnetic tape or similar device used to produce written or printed names and addresses by electronic or mechanical means.
Space Flight Property
The sale or use of specified qualified property for use in space flight, including an orbital space facility, space propulsion system, space vehicle, satellite, or space station of any kind, or any property which is placed or used aboard any such system, including fuel adapted and used exclusively for space flight, is exempt from sales and use tax.
Construction Contracts to Be Performed Outside California
A sale of property to a construction contractor who holds a valid California seller’s permit is exempt from sales tax when the property is used by the purchaser outside this state in the performance of a contract to improve real property and, as a result of such use, is incorporated into and becomes a part of real property located outside this state. This exemption applies only if the purchaser certifies in writing to the seller at the time of purchase that the property will be used in a manner qualifying for the exemption.
Revision December 2025