Tax Rate FAQ for Sales and Use TaxOpen All Close All
- California sales tax is imposed on all California retailers.
- It applies to all retail sales of merchandise (tangible personal property) in the state.
- Retailers are required to obtain a seller's permit and to report and pay sales tax to the California Department of Tax and Fee Administration (CDTFA).
- Retailers have the option of (reimbursing themselves) collecting sales tax from their customers. Most retailers choose this option.
- Whether or not a retailer collects sales tax, the retailer must report and pay the tax due.
- California use tax is imposed on consumers of merchandise (tangible personal property) that is used, consumed, or stored in this state.
- Consumers in California owe use tax on purchases from out-of-state retailers when the out-of-state retailer is not registered to collect California tax, or for some other reason does not collect California tax.
- Applies to purchases made in foreign countries and hand carried through U.S. Customs into California.
- The state sales tax and use tax are "mutually exclusive," which means either sales tax or use tax may apply to a single transaction, but not both.
Many of California's cities, counties, towns, and communities have special taxing jurisdictions (districts), that impose a transaction sales and use tax, referred to as district taxes, in addition to the standard statewide tax rate of 7.25%.
- District taxes increase the tax rate in a particular area by adding the district tax to the basic statewide tax rate of 7.25% (effective January 1, 2017).
- Rates for these districts may range from 0.10% to 1.00% per district.
- In some areas, there is more than one district tax in effect.
- In others, there is no district tax in effect.
- As a seller or a consumer, you are required to report and pay the applicable district taxes for your taxable sales and purchases in that district.
To find the sales and use tax rate for a specific location, you may use the Find a Sales and Use Tax Rate webpage to look up a tax rate by address.
For more information, please refer to publication 44, District Taxes (Sales and Use Taxes), or publication 105, District Taxes and Sales Delivered in California. These publications are available on our website or they can be mailed to you by contacting our Customer Service Center at 1-800-400-7115.
To find the current sales and use tax rate for a specific location, you may use the Find a Sales and Use Tax Rate webpage to look up a tax rate by address.
On the California City & County Sales & Use Tax Rates webpage, you will also find the following information:
- The rates and effective dates for specific district taxes.
- Information concerning recent tax rate changes.
- The history of sales and use tax rates.
- The combined sales, use, and district tax rate in certain cities and communities in California.
No, it is not always possible to determine the correct tax rate based solely on a mailing address or zip code.
- A customer may have a zip code and city name whose mail is routed to a post office in a neighboring area that has a different tax rate. If you relied solely on the post office mailing address to determine the tax rate, you might assume the customer lived in a county or city other than the one in which he or she actually resides. As a result, you could apply an incorrect tax rate.
- Post Office mailing addresses sometimes use a "city" designation other than the actual city in which the addressee is located. For example, in Los Angeles County, the "cities" of Hollywood, Van Nuys, Sherman Oaks, San Pedro, West Los Angeles, and Eagle Rock are actually located within the City of Los Angeles.
To assist retailers and consumers in identifying addresses located within special taxing jurisdictions, some cities have developed an online database of addresses. In cooperation with these cities, our webpage, California City and County Sales and Use Tax Rates provides a link to their address databases. If you have questions about the addresses, you should contact the cities directly.
You are considered "engaged in business" in a district if you:
- Ship or deliver the property into the district using your own vehicle.
- Maintain, occupy, or use any type of office, sales room, warehouse, or other place of business in the district, even if it is used temporarily, indirectly, or through an agent.
- Have any kind of representative operating in the district for the purposes of making sales or deliveries, installing or assembling tangible personal property, or taking orders.
- Derive rentals from a lease of tangible personal property located in the district.
- Sell or lease vehicles or undocumented vessels which will be registered in a district.
However, beginning April 1, 2019, a new district use tax collection requirement pursuant to the Wayfair decision applies to both in-state and out-of-state retailers. For more information, please see our Use Tax Collection Requirements Based on Sales into California due to the Wayfair Decision guide.
Transactions (sales) tax is imposed on the sale of merchandise (tangible personal property) in a district, and you are generally responsible for reporting transactions tax if you are a retailer "engaged in business" in a district (See FAQ #8).
- If you have more than one business location, your liability for district tax will depend on the location at which you conduct principal negotiations for your sales.
For more information about the application of tax to sales by businesses with multiple locations, please see FAQ#5.
District use taxes are imposed on the storage, use or other consumption of merchandise (tangible personal property) in a district. You may be responsible for reporting district use tax if:
- You are "engaged in business" in a district.
- You lease, store, or consume merchandise (tangible personal property) in a district.
Declaration to relieve retailer of obligation to collect district use tax for sales delivered to purchaser outside of the district
- Regulation 1823.4, Place of Delivery of Tangible Personal Property-Generally, provides an exemption for the purposes of the use tax, not the transactions (sales) tax. A retailer may be relieved of the obligation to collect the use tax (for sales other than vehicles, aircraft, and vessels) imposed by a district when you ship or deliver merchandise (tangible personal property) outside of that district to a purchaser's principal residence address or principal business address.
- You are relieved of the obligation by accepting, in good faith, a properly executed declaration under penalty of perjury, as provided in Regulation 1823.4.
If you are a retailer whose only business location is in a district, you must generally report and pay the district's transactions tax on all your sales unless:
- You, your agent, or a common carrier ships or delivers the property to an out-of-state or out-of-district location.
- The sale is exempt from the general sales tax or is otherwise exempt from the transactions tax.
If your business is located outside a district, your over-the-countersales are not subject to transactions tax. However, for property that you ship or deliver into a district, you may be required to pay district use tax if you are "engaged in business" in that district.
If you are a retailer with more than one location, the place of sale is generally considered the location at which you carry on principal negotiations even if you must forward the order to another location for acceptance, approval of credit, shipment, or billing. Your employees' activities will be attributed to the location from which they work. Consequently, sales made or negotiated by employees at places located in districts are generally subject to transactions tax.
As with a single location business, you are allowed an exemption from district tax for property that is shipped to an out-of-state location or for property that is also exempt from the sales and use tax.
You are not required to pay transactions tax on sales made at business locations outside districts. You may, however, be required to collect district use tax if you ship the property into a district in which you are "engaged in business."
You are not required to pay for transactions tax on sales made:
- At business locations outside districts.
- When you accept a declaration in good faith as provided in Regulation 1823.4, Place of Delivery of Tangible Personal Property Generally.
9. As a retailer, am I subject to district tax in a district where I solicit and accept a sale when the property is never physically in the district?
The transactions (sales) tax does not apply to property sold within a district but is shipped or delivered, as agreed to in the contract of sale, to a point outside the district.
You are generally required to pay the district use tax in your customer's district, if you are "engaged in business" in the district in which you deliver the merchandise (See FAQ #5).
10. If I am located in a district, am I subject to my district's tax if I make a sale to a person located outside the district?
You are generally not required to pay for your district's tax if the customer does not take possession of the property in your district.
However, if your customer is located in another district, you are generally required to pay that district's use tax if:
- You are "engaged in business" in that district and you ship or deliver the property, as agreed to in the contract of sale, into the district (or otherwise participate in the district in the making of the sale).
- You are a licensed dealer selling a vehicle, undocumented vessel, or aircraft that the buyer registers at an address located in the district.
11. If I purchase property at a lower rate of tax, am I required to pay additional district tax if I use the property in a district with a higher tax rate?
Yes. If the property is used in a district with a higher tax rate than the rate paid at the time of purchase, the additional tax is due. If you hold a seller's permit, you are required to report and pay the additional business related use tax liabilities on your sales and use tax returns. If you do not have a seller's permit with the CDTFA, you can report your purchase(s) subject to use tax on our Taxpayer Online Services Portal page and select "One-Time Use Tax and/or Lumber Return." You may also report and pay use tax to the Franchise Tax Board (FTB) on your California income tax return.
For more information on use tax, please visit the California Use Tax Information webpage.
12. If I am not located in a district and deliver property to my customer at my place of business, must I collect district use tax if the customer's billing address is located in a tax district?
You do not owe district tax on a sale made to a district resident when you do both of the following:
- Make the sale outside the district.
- Transfer possession or ownership of the merchandise outside the district.
Exceptions: If you deliver the product into the district with your own vehicle, or participated in that district in making the sale and are "engaged in business" in the district (see FAQ #5), you must collect the district's use tax.
13. As a retailer (dealer) of vehicles, aircraft, or undocumented vessels, what tax rate should I charge my customers?
Retailers of certain vehicles, aircraft, or undocumented vessels are considered "engaged in business" in districts in which the property is registered, and they are required to collect the applicable district use tax. Regulation 1823.5, Place of Delivery of Certain Vehicles, Aircraft and Undocumented Vessels, relates to the place of delivery of certain vehicles (both commercial and non-commercial), aircraft, and undocumented vessels for the purpose of the district transactions (sales) tax portion only. It does not apply to the district use tax.
- Declaration to relieve retailer of obligation to collect district transactions (sales) tax for sales of certain vehicles, vessels, and aircraft delivered to purchaser outside of the district. Regulation 1823.5, Place of Delivery of Certain Vehicles, Aircraft and Undocumented Vessels, provides:
For the purposes of the (transactions) sales tax, not the use tax, the retailer may be relieved of the obligation to collect the (transactions) sales tax, when the retailer ships or delivers certain vehicles, vessels, or aircraft to a district imposing a district tax.
You may not be liable for a district's (transactions) sales tax on sales made when you accept a declaration in good faith as provided in Regulation 1823.5, Place of Delivery of Certain Vehicles, Aircraft, and Undocumented Vessels.
If the purchaser issues a declaration to the seller and then the property is principally stored, used, or otherwise consumed in that district, the purchaser will be subject to and must pay the use tax.
See publication 44, District Taxes (Sales and Use Taxes), publication 34, Motor Vehicle Dealers, Regulation 1610, Vehicles, Vessels, and Aircraft, Regulation 1566, Automobile Dealers and Sales Representatives, and Regulation 1669.5, Demonstration, Display, and Use of Property Held for Resale-Vehicles.
14. As a retailer (dealer) of certain "commercial vehicles," what tax rate should I charge my customers?
The tax rate applicable to certain "commercial vehicles" depends on the location where they are used. For the purposes of Regulation 1823.5, "commercial vehicle" means a vehicle required to be registered under the Vehicle Code, used or maintained for the transportation of persons for hire, compensation, or profit or designed, used, or maintained primarily for the transportation of property. Passenger vehicles that are not used for the transportation of persons for hire, compensation, or profit are not commercial vehicles.
The place of use determines the tax rate regardless of the location of the property when it is first purchased. See publication 44, District Taxes (Sales and Use Taxes), and publication 34, Motor Vehicle Dealers. Also, please see Regulation 1566, Automobile Dealers and Sales Representatives, Regulation 1669.5, Demonstration, Display, and Use of Property Held for Resale-Vehicles, and Regulation 1610, Vehicles, Vessels and Aircraft.
You may not be subject to a district's (transactions) sales tax on sales made under certain conditions, such as when you accept a declaration in good faith as provided in Regulation 1823.5, Place of Delivery of Certain Vehicles, Aircraft, and Undocumented Vessels.
For further assistance on sales or purchases of vehicles, vessels, and aircraft, please see our Tax Guide for Purchasers of Vehicles, Vessels, & Aircraft or call our Consumer Use Tax Section at 1-916-445-9524.
As a purchaser, you are generally required to report district use tax on the purchase price of merchandise (tangible personal property) when:
- You make first taxable use of the property in a district.
- You purchased the property without tax or at a lesser rate of district tax than is imposed in the district of use.
- You are a California consumer and owe use tax on purchases made from an out-of-state vendor that is not registered to collect California tax, or for some other reason does not collect California tax.
You may be eligible for a credit of tax paid to another district (or state for out-of-state purchases), but only up to the amount of tax due in the district of use.
Consumers must pay use tax on their purchases of vehicles, vessels, and aircraft from persons not required to hold a seller'spermit (from private, non retailer parties). The use tax rate is based on the location where the purchase will be registered. The use tax rate applicable to vessels or aircraft depends on the location where they are moored or hangared. Please refer to publication 79, Documented Vessels and California Tax, publication 79-A, Aircraft and California Tax, publication 34, Motor Vehicle Dealers, and Regulation 1610, Vehicles, Vessels and Aircraft. For additional information, please call our Consumer Use Tax Section at 1-800- 400-7115.
To qualify as an exempt contract from district taxes, a "fixed-price contract" must meet the following conditions:
- It must have been entered into before the effective date of the district tax.
- Exception: A contract signed after the effective date qualifies if (1) it is based on a binding bid submitted before the effective date, and (2) it is signed before the bid can legally be changed.
- Contracts for which an irrevocable (binding) bid was submitted prior to the effective date will qualify even when signed on or after that date provided they are signed during a period for which the bid is still irrevocable.
- It must be for a fixed amount. A contract may not have any clauses that allow for increases or decreases in the contract price because of a change in the tax rates or the cost of the property to be furnished. This provision is not invalidated if the contract allows change orders. Change orders are considered separate contracts.
- All parties must be bound by the terms of the contract.
- No party can have the unconditional right to terminate the contract, whether or not that right is exercised.
- The sales tax amount or rate must be specifically stated in the contract or the contract must state it is tax-included.
Leases and construction contracts
- Leases and fixed-price construction contracts may qualify for this district tax exemption.
- A time-and-material construction contract does not qualify.
The exemption allowed for fixed-price contracts applies not only to sales of materials and fixtures under fixed-price construction contracts and to contracts for leases of tangible personal property but also to standard retail sales contracts. These publications can also be mailed to you by contacting our Customer Service Center at 1-800-400-7115.