California imposes a statewide base sales tax of 7.25% on retail sales of most tangible personal property. Local district taxes add anywhere from 0.10% to 1.00% or more, bringing the combined rate to between 7.25% and 10.75% depending on location (some Los Angeles County cities are at the top of the range). Sales tax is administered by the California Department of Tax and Fee Administration (CDTFA). Any retailer with substantial physical presence in California, or with over $500,000 in California sales in the prior or current calendar year, must register for a seller's permit and collect tax. Under AB 147 (2019), marketplace facilitators (Amazon, eBay, Etsy) collect on behalf of third-party sellers. Groceries, prescription medicines, and most services are exempt.
| Governing law | Cal. Revenue & Taxation Code §§ 6001–7176 (Sales & Use Tax Law) |
|---|---|
| Regulator | California Department of Tax and Fee Administration (CDTFA) |
| Statewide base rate | 7.25% (breakdown: 6% state + 1.25% mandatory local) |
| District tax range | 0.10% to 1.50% (voter-approved in specific districts) |
| Total combined range | 7.25% (base) to 10.75%+ (highest LA-area cities) |
| Economic nexus threshold | $500,000 in California sales in prior or current calendar year |
| Physical nexus | Even a single employee, contractor, or inventory location can create nexus |
| Seller's permit | Required for retailers; free to obtain |
| Filing frequency | Annual, quarterly, monthly, or prepay — based on tax volume |
| Groceries | Exempt (with narrow exceptions like carbonated drinks and prepared food) |
| Prescription drugs | Exempt |
| Services | Most services not taxable (unlike goods) |
Statewide base rate (7.25%)
California's statewide base sales tax rate is 7.25%, one of the highest state-only rates in the country. The rate breaks down as:
| Component | Rate | Distribution |
|---|---|---|
| State General Fund | 6.00% | General state revenue |
| State Local Revenue Fund (2011) | 1.0625% | Public safety realignment |
| Local Public Safety Fund (Prop 172, 1993) | 0.50% | Local police, fire, corrections |
| Local Revenue Fund (Bradley-Burns) | 1.00% | City and county general revenue |
| County Transportation Fund | 0.25% | Local transportation |
| Total statewide minimum | 7.25% |
Every retail sale in California is subject to at least this 7.25% rate; the total collected depends on additional local district taxes.
District taxes (up to 10.75%+)
Voters in California cities and counties can approve additional district taxes for transportation, education, general revenue, or other purposes. These add anywhere from 0.10% to 1.50% (or more, cumulatively) on top of the statewide 7.25%.
Examples of current combined rates (approximate — verify current rate with CDTFA):
- Los Angeles (city): ~9.50% (7.25% state + LA County district taxes)
- San Francisco: ~8.625%
- San Diego: ~7.75%
- Sacramento: ~8.75%
- Long Beach: ~10.25%
- Santa Monica: ~10.25%
- Some LA County cities (Compton, Culver City): ~10.25%–10.75%
CDTFA publishes a current rate lookup by address at cdtfa.ca.gov/taxes-and-fees/rates that retailers should reference.
What is taxable
California generally taxes the retail sale of tangible personal property. Common taxable transactions:
- Retail sales of merchandise (clothing, electronics, furniture, tools).
- Prepared food and restaurant meals.
- Carbonated beverages (soda, sparkling water).
- Books, magazines, digital downloads of tangible-property equivalents.
- Cannabis sales (with additional excise tax).
- Motor vehicles and parts.
- Alcoholic beverages.
- Tobacco products.
Major exemptions (groceries, prescriptions)
California exempts several major categories from sales tax:
Food for human consumption
Groceries — most food items intended for home preparation and consumption — are exempt. Exceptions include:
- Prepared/hot foods sold ready to eat.
- Carbonated beverages (including flavored sparkling water).
- Food consumed at the seller's premises (restaurants, delis with seating).
- Food sold through vending machines (some).
- Bakery goods sold with utensils.
Prescription medications
Prescription drugs dispensed to a licensed patient are exempt. Over-the-counter medications are generally taxable unless prescribed.
Medical devices
Wheelchairs, prosthetics, orthotics, and certain other medical devices prescribed by a doctor are exempt.
Services
Most services (accounting, legal, medical, consulting, professional services) are not subject to California sales tax. This distinguishes California from states like Hawaii and New Mexico that tax services broadly.
Manufacturing & R&D equipment
Partial exemption (3.9375%) for certain manufacturing and R&D equipment purchases (Cal. Rev. & Tax. Code § 6377.1).
Other common exemptions
- Sales to the US government.
- Certain sales for resale (with resale certificate).
- Newspapers and periodicals.
- Agricultural feed and supplies for commercial farming.
- Occasional sales (garage sales, personal one-off sales in some cases).
Seller's permit requirement
Any person or business engaged in retail sales of tangible personal property in California must obtain a Seller's Permit from CDTFA before making sales. The permit is free and can be applied for online through CDTFA online services.
The seller's permit allows the retailer to:
- Legally collect sales tax from customers.
- Buy goods for resale using a resale certificate (without paying tax on wholesale purchases).
- File sales tax returns.
Making sales without a valid seller's permit is a misdemeanor under Cal. Rev. & Tax. Code § 6071. CDTFA can also impose civil penalties.
Nexus & economic nexus threshold
California can require a retailer to register and collect sales tax if the retailer has nexus — a sufficient connection to the state. Two paths to nexus:
Physical nexus
Any physical presence creates nexus:
- Office, warehouse, or store in California.
- Employees or contractors working in California.
- Inventory stored in California (including Amazon FBA in California warehouses).
- Traveling salespeople soliciting orders in California.
Economic nexus (post-Wayfair)
After the U.S. Supreme Court's 2018 decision in South Dakota v. Wayfair, Inc., California adopted an economic nexus threshold. Under Cal. Rev. & Tax. Code § 6203, a remote seller with:
- $500,000 or more in California sales in the prior or current calendar year
...must register, collect, and remit California sales/use tax even without any physical presence.
Marketplace facilitator (AB 147)
AB 147 (2019) requires marketplace facilitators — platforms that facilitate sales for third-party sellers, like Amazon, eBay, Etsy, Walmart Marketplace, and Airbnb — to collect and remit California sales tax on all sales made through their platform. This applies whether or not the underlying seller has nexus.
The result: sellers who sell exclusively through marketplace facilitators generally do not need to worry about California sales tax on those sales — the marketplace handles it. Sellers who also sell direct-to-consumer (own website) still need to register and collect on those direct sales if they meet nexus thresholds.
Collecting & filing sales tax
Collection
Retailers must collect the correct combined rate at the point of sale based on where the goods are delivered (destination-based sourcing for most transactions).
Filing frequency
CDTFA assigns filing frequency based on your tax volume:
- Annual filers — very small volume (under $100 quarterly tax).
- Quarterly filers — most small businesses.
- Monthly filers — higher-volume retailers.
- Quarterly prepayers — very high volume, must prepay monthly and reconcile quarterly.
Returns are filed through CDTFA online services with the tax due. Late filings incur penalties and interest.
Use tax (parallel obligation)
California use tax is the parallel tax on purchases where California sales tax was not collected — typically online purchases from out-of-state retailers who don't have nexus. The use tax rate matches the sales tax rate for the delivery location.
Individuals report use tax on the California income tax return (Form 540, use tax line) or via CDTFA. Businesses report use tax on their sales tax return.
Penalties for non-compliance
Failure to file, late filing, or failure to pay sales tax triggers penalties:
- Late filing penalty: 10% of the tax due (subject to reasonable-cause abatement).
- Late payment penalty: 10% of the tax due.
- Failure to file penalty: up to 25% of tax due.
- Interest: compounds monthly at CDTFA's rate.
- Fraud penalty: up to 40% of the tax evaded.
Persistent non-compliance can lead to CDTFA revoking the seller's permit and, in serious cases, criminal prosecution.
State agency contact
California Department of Tax and Fee Administration (CDTFA)
Successor to the Board of Equalization for sales/use tax administration
Compared to neighboring states
Related California laws
Related comparisons
Related guides
Recent changes
- April 1, 2019AB 147 established economic nexus (currently $500K threshold) and required marketplace facilitators to collect sales tax on third-party seller sales.
- July 1, 2017CDTFA was established, taking over most sales/use tax administration from the Board of Equalization (BOE).
- 2018South Dakota v. Wayfair, Inc. (US Supreme Court) overturned the Quill physical-presence rule and enabled economic-nexus laws.
Need advice on your specific California situation?
State Law Handbook doesn't provide legal advice. Connect with a licensed California attorney for personal counsel.
Sources
Primary sources
- Cal. Rev. & Tax. Code §§ 6001–7176. The California Sales & Use Tax Law. https://leginfo.legislature.ca.gov/faces/codesTOCSelected.xhtml?tocCode=RTC
- California Department of Tax and Fee Administration. The administering agency. https://www.cdtfa.ca.gov/
- CDTFA Sales Tax Rate Lookup. Current rates by address. https://www.cdtfa.ca.gov/taxes-and-fees/rates.aspx
- AB 147 (2019) — Marketplace Facilitator & Economic Nexus. The core remote-seller law. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB147
- CDTFA Publication 73 — Your California Seller's Permit. The state's official guide. https://www.cdtfa.ca.gov/formspubs/pub73/