California Sales Tax and Use Tax
What is the California sales tax?
Taxes in California are origin-based 1, meaning the California sales tax rate is based, or determined from, the destination location an item is shipped to. This complicates business for retailers who need to have the exact and up-to-date sales tax rate for every shipment they make.
To see a full breakout of California sales tax rates by state, county, city and special district, use our easy California sales tax calculator. After putting in any ZIP code, you can enter a retail price to calculate California sales tax totals.
What is the California use tax?
The California state use tax rate is the same as the state, county, city and special district rates.
If you reside in CA, use tax is due to the state on any and all transactions where sales tax has not been paid, even out-of-state internet sales.
Who has to pay California sales tax or use tax?
In general, a business must collect and remit all applicable California sales taxes if that business has nexus, a physical presence such as a brick-and-mortar location, within a given state. The presence of an employee or salesperson, delivery by the seller's vehicle, and storage of materials usually establishes nexus as well.
California says that an out-of-state seller is required to collect tax if they can be defined as "sellers with substantial nexus". California does not currently have additional laws establishing nexus for other reasons such as out-of-state businesses using in-state affiliates, advertisers or vendors, or businesses that make internet sales or mail catalogs.
If you are not sure if you have established nexus in California, you can usually get free help by contacting the California Tax and Revenue Department. Click here for an updated listing of direct phone numbers. You could also contact a qualified certified public accountant or lawyer who specializes in tax law in California. Click here for listing of recommended resources.
Special rules applying to California sales tax and use taxes
- Shipping is taxable.
- Finance charges are exempt from sales tax.
- Clothing is taxed at the same rate as the general sales tax.
- California Sales tax holidays are held for Energy Star items as well as some back to school items and hurricane preparedness items.
Since California legislators can vote to change the California sales tax and use tax rates at any time, it is very difficult for individuals to keep track of the changes. The population of CA state is also rapidly changing, which can cause frequent updates to the ZIP codes and local municipality names and complicates the job of keeping track of California sales tax jurisdictions.