Tax Guide for Membership Fees

Overview

Membership fees are payments made to obtain access to benefits and services offered by an organization or business. They provide a consistent revenue stream while offering members access to exclusive benefits and services. This guide provides easily accessible information to assist you in understanding your sales and use tax obligations related to membership fees.

Application of Tax to Membership Fees

Taxable Memberships

Membership fees related to the anticipated retail sale of tangible personal property (merchandise) are generally subject to tax (Regulation 1584). Such fees are taxable when:

  • The retailer sells its products only to members and the membership fee exceeds a nominal amount of (subject to periodic increase) as of January 1, 2026, or
  • The retailer sells its products for a lower price to members than to non-members, regardless of the membership fee amount.

Notes

  1. Starting from September 2000, this nominal periodic increase is calculated every five years and reflects changes in the California Consumer Price Index (CCPI) whenever the change is more than 5 percent than the previous adjustment. The amount calculated is rounded to the nearest $5. For the January 1, 2026 adjustment computation, the CCPI index on June 30, 2025 was compared to the CCPI index on June 30, 2020. For a table of the yearly CCPI, please visit the Department of Industrial Relations webpage.

Nontaxable Memberships

Membership fees not related to anticipated retail sales of subject to tax merchandise are not taxable. This includes situations where:

  1. The membership fee is primarily for services and any merchandise transferred is incidental to the services.
  2. A member does not purchase any taxable merchandise during the period covered by the membership.

For a series of business memberships with applicable exemptions or exclusions, please see our Key Industry Topics Section below for examples.

  1. Annotation 295.1384

Key Industry Topics

Beauty Salon or Spa Memberships

Beauty salons or spas may offer memberships for discounted services such as haircuts, eyelash extensions, and waxing. These membership fees are generally not taxable even if the beauty salon or spa also offers beauty merchandise for sale that would normally be subject to tax. The membership fee is related to accessing the services, not the anticipated retail sale of taxable merchandise.

Country Club Membership

Country club memberships grant members access to golf courses, tennis courts, swimming pools, and other facilities. Country club membership fees are not taxable even when members may purchase or are required to purchase a minimum amount of food and drink to cover operational costs for bookings and events on site. The membership fee is related to accessing the facilities, not the anticipated retail sale of food and merchandise.

Gun Club Membership

Gun club memberships typically allow members access to a shooting range, training classes, competitions. They may also provide discounts on merchandise such as ammunition. Gun club membership fees are generally not taxable even when members purchase taxable merchandise. The membership fee is primarily related to accessing the shooting range and training classes, and not the anticipated retail sale of merchandise.

Health Club Membership

Membership fees that grant access to health club facilities, such as a gym or a massage facility, are generally not taxable even if the operator sells consumables, fitness and wellness merchandise, or other miscellaneous items on the premises. The membership fee is related to accessing the facility, not the anticipated retail sale of taxable consumables, merchandise, or other miscellaneous items.

Theme Park Membership

Theme park memberships, often called season passes, generally grant members unlimited access to the theme park for a specific period of time. These memberships often come with additional benefits such as discounts on food, merchandise, and parking. These membership fees are not taxable even when they include discounts on food and merchandise. The membership fee is related to park access and entertainment, not the anticipated retail sale of taxable food and merchandise.

Online Retailer Membership

Online retailers may offer membership subscriptions that provide discounts on merchandise and free shipping. These membership fees are generally taxable because they are related to the anticipated retail sales of taxable merchandise, and the retailer sells merchandise at a lower price to members than to non-members.

When determining whether a retailer sells merchandise for a lower price to members than to non-members, we use “delivered price” as defined in Regulation 1628, subdivision (b)(1), not the listed retail selling price. The delivered price includes shipping and handling, which are typically added for non-members. Therefore, even if the listed retail selling price appears to be the same for members and non-members, the total cost is usually lower for members.

However, if a member does not buy any taxable merchandise during the membership period, the membership fee is not taxable. If this happens, the retailer may file a claim for refund or amend their return to refund the tax to the customer, subject to the statute of limitations based on the date the overpayment was made.

Restaurant Membership

Certain restaurants and cafes offer a membership program that provides members free and reduced priced food and drinks. These membership fees are taxable because the membership is related to the anticipated retail sales of taxable products, and the retailer sells its food and drinks for a lower price to members than to non-members.

Online Food Delivery Membership

Online food delivery services may include optional membership fees that offer benefits to members that include reduced service fees and discounted delivery charges on eligible orders. These membership fees are taxable because the membership is related to the anticipated retail sales of taxable products, and these delivery services sell food and drink orders operating on their platforms for a lower price to members than to non-members.

Wholesale Warehouse Membership

Wholesale warehouse memberships grant members access to purchase merchandise from wholesale clubs or their websites. If the retailer sells only to members, whether the membership fees are taxable depends on whether they exceed a nominal amount. As of January 1, 2026, the nominal amount is to not exceed $85 per year, subject to increase every five years. If the membership fee does not exceed the nominal amount, it is not taxable.

If a retailer sells merchandise to both members and non-members but offers lower prices to members, the membership fee is considered part of the gross receipts from merchandise sales. In this case, if the sales of merchandise are taxable, then the membership fee is also taxable no matter its amount.

However, if a member does not buy any taxable merchandise during the membership period they enrolled in, the membership fee is not taxable. If this happens, the retailer may file a claim for refund to refund their customer the tax, subject to the statute of limitations based on the date the overpayment was made.

Wine Club Membership

Wine club memberships generally require members to regularly purchase wine, but at a discounted price. These membership fees are taxable because the membership is related to the anticipated retail sales of taxable merchandise, and the retailer sells its wine for a lower price to members than to non-members.

Resources

If You Need Help

If at any time you need assistance with topics included in this guide, or a membership specific to your business not discussed in this guide, feel free to contact us by telephone or email. For contact information and hours of operation, please see our How to Contact Us webpage.

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