Tax Guide for Retailers and Purchasers of Digital Products
Overview
Beginning January 1, 2027, sales and use tax generally applies to the retail sale of a digital product and any copyright or patent interests associated with the digital product sold in California, or purchased from a retailer for storage, use, or other consumption in California. Senate Bill 122 (Stats. 2026, Ch. 23) expands the definition of "tangible personal property" to include digital products whether:
- Transferred on tangible storage media
- Transferred electronically
- Accessed remotely
As a result, retailers making sales of taxable digital products in California may be required to register with the California Department of Tax and Fee Administration (CDTFA), file returns, and report and pay the applicable taxes. Certain provisions of the law may relieve the retailer from liability for sales tax or the obligation to collect use tax on specified transactions. See Retailers for additional information.
See our Online Services webpage for information on how to register with us.
Purchasers may be responsible for reporting and paying use tax directly to us in certain circumstances, including when the tax is not paid to the retailer at the time the digital products are purchased. See Purchasers for more information.
This guide explains how California sales and use tax applies to digital products. It includes information for retailers and purchasers, definitions of key terms, exemptions, registration requirements, and resources such as applicable laws and regulations.
How to Use This Guide
Definitions defines digital products and relevant terms used in this guide.
Retailers provides important information regarding registration, reporting requirements, exemptions, and local and district tax allocation responsibilities for retailers selling digital products.
Purchasers provides important information regarding use tax obligations, exemptions, and direct payment requirement responsibilities for purchasers of digital products.
Resources provides links to publications, regulations, law sections, and other helpful CDTFA resources.
Please note that the information included is general in nature and is not intended to replace any law or regulation.
Get it in Writing
Tax and fee laws can be complex and difficult to understand. If you have specific questions regarding how tax applies to your business, we recommend that you get answers in writing from us. This will enable us to give you the best advice and may protect you from owing tax, interest, or penalties should we give you erroneous advice. Such protection is not provided for verbal advice given to you in person or on the telephone.
Requests for written advice can be emailed to us or mailed directly to the CDTFA office nearest you.
For more information, see publication 8, Get it in Writing
If You Need Help
If at any time you need assistance with topics included in this guide, or with other topics not included, feel free to contact us by telephone or email. Contact information and hours of operation are available in Resources.
If you have suggestions for improving this guide, please contact us via email.