Sales Tax In California
Understand how sales tax in California works, how much to charge and use our handy sales tax calculator to work it all out for you.
What Is Sales Tax?
Sales tax is a consumption tax imposed by the government on the sale of goods and services. In other countries it’s comparable to GST, HST or VAT. It is typically levied as a percentage of the purchase price and is collected by businesses on behalf of the government. The purpose of sales tax is to generate revenue for the government and fund public services and programs.
When a business makes a sale to a customer, it adds the applicable sales tax to the purchase price. The collected sales tax is then reported and remitted to the appropriate government authority, usually on a regular basis, such as monthly or quarterly.
The specific rate of sales tax can vary depending on the jurisdiction, such as a state, county, or city. Different products and services may also have different tax rates or be exempt from sales tax altogether. The sales tax rate is expressed as a percentage, such as 6%, and is applied to the taxable amount of the transaction.
The responsibility for collecting and remitting sales tax typically falls on businesses, but the burden of paying the tax ultimately rests on the end consumer / client. It is important for businesses to comply with sales tax regulations, maintain accurate records, and remit the collected tax to the government to ensure proper tax compliance.
Sales Tax Calculator
Enter your pre-tax sub-total below and the applicable tax rate. Don’t use commas, % symbols or any other characters, other than numbers.
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What Is The Sales Tax Rate In California?
The sales tax rate in California can vary depending on your location within the state. The state sales tax rate in California is 7.25%. However, it’s important to note that additional local sales taxes may be imposed by counties, cities, and other local jurisdictions, which can increase the overall sales tax rate.
In some areas, the combined sales tax rate in California can be as high as 10.25% due to these local additions. The specific rate applicable to a particular transaction would depend on the location where the sale takes place.
It’s important to consult with the California Department of Tax and Fee Administration (CDTFA) or a tax professional for the most up-to-date information regarding sales tax rates in California, as rates may have changed since my knowledge cutoff in September 2021.
Sales Tax Rates, CA - Key Areas
These are the applicable California sales tax rates for some of the larger commercial areas in the state. You can use this lookup tool from CDTFA to find your specific region if you don’t see it below. All information is up to date as of July 2023.
Anaheim
7.75%
Bakersfield
8.25%
Cerritos
9.5%
Concord
9.75%
Fairfield
8.375%
Fontana
7.75%
Fresno
8.35%
Irvine
7.75%
Long Beach
10.25%
Los Angeles
9.5%
Newport Beach
7.75%
Oakland
10.25%
Sacramento
8.75%
San Diego
7.750%
San Jose
9.375%
San Francisco
8.625%
South San Francisco
9.875%
Santa Ana
9.25%
Santa Clara
9.125%
Temecula
8.75%
Fairfield
8.375%
What Types Of Businesses Need To Add Sales Tax In California?
In California, most businesses that engage in retail sales of tangible personal property or certain taxable services are generally required to collect and remit sales tax. This includes businesses that sell goods or services directly to consumers or other businesses.
Here are some examples of businesses that typically need to add sales tax to their transactions in California:
1. Retail stores: Brick-and-mortar stores that sell goods directly to consumers, such as clothing stores, electronics stores, furniture stores, etc.
2. Online retailers: Businesses that operate e-commerce websites and sell goods online to California customers.
3. Restaurants and cafes: Establishments that sell prepared food and beverages for consumption.
4. Service providers: Certain services, such as vehicle repairs, landscaping, construction, and janitorial services, may be subject to sales tax in California.
5. Contractors and builders: Businesses that construct or improve real property, including general contractors and subcontractors.
6. Rental businesses: Companies that lease or rent out tangible personal property, such as equipment rental companies or vehicle rental agencies.
7. Event organizers: Businesses that organize and sell tickets for events, concerts, performances, conferences, etc.
8. Professional services: Some professional services, such as legal, accounting, and consulting services, may be subject to sales tax in certain situations.
If you’re unsure about whether your business needs to charge sales tax consult an expert in back office support.
What Businesses Are Exempt From Sales Tax?
In California, certain businesses and types of transactions may be exempt from sales tax. These exemptions can vary depending on the specific circumstances and can be subject to change. Here are a few examples of businesses or transactions that might be exempt from sales tax in California:
1. Resale exemption: Businesses that purchase goods for resale can often claim a resale exemption. They do not pay sales tax at the time of purchase but instead collect sales tax when selling the goods to their customers. The burden of proof for claiming a resale exemption lies with the purchaser, who must have a valid resale certificate on file.
2. Nonprofit organizations: Qualified nonprofit organizations, such as charitable, religious, or educational institutions, may be exempt from sales tax for certain purchases or activities. However, specific criteria and documentation may be required to claim the exemption.
3. Medical and healthcare services: In general, medical and healthcare services provided by licensed professionals are not subject to sales tax in California. This includes services such as medical examinations, surgeries, therapy sessions, etc. However, the sales of tangible personal property, such as prescription drugs or medical equipment, may be subject to tax.
4. Government agencies: Purchases made by federal, state, or local government entities are typically exempt from sales tax. Government agencies often provide a valid exemption certificate or proof of governmental status when making purchases.
5. Certain agricultural activities: Some sales related to agricultural production, such as sales of livestock, crops, and certain equipment used directly in farming, may be exempt from sales tax in California.
These exemptions can be complex and subject to specific requirements and limitations. The California Department of Tax and Fee Administration (CDTFA) can provide detailed information about exemptions and specific industries.
How Do You Pay Sales Tax To The Government?
To pay sales tax to the government, your business will typically follow these steps:
1. Obtain a sales tax permit: Before collecting sales tax, you need to register for a sales tax permit with the appropriate government authority. In California, you would register with the California Department of Tax and Fee Administration (CDTFA).
2. Collect sales tax: When making sales to customers, your business is responsible for collecting the applicable sales tax from customers at the time of the transaction. This is typically added to the sales price and clearly indicated on the invoice or receipt.
3. Keep records: It’s important to maintain accurate records of all sales transactions, including the sales tax collected. This documentation is necessary for calculating and reporting your sales tax liability.
4. Calculate sales tax liability: Determine the total amount of sales tax that you have collected during a specific reporting period. This involves summing up the sales tax amounts collected from all taxable transactions.
5. File sales tax return: In California, businesses are generally required to file a sales and use tax return on a regular basis (monthly, quarterly, or annually) depending on the volume of sales. The return reports the sales tax collected during the reporting period.
6. Remit payment: Along with filing the sales tax return, businesses are required to remit the sales tax payment to the government. The amount to be remitted is the total sales tax collected during the reporting period.
7. Payment methods: Different jurisdictions may have different payment methods available. In California, you can make sales tax payments electronically through the CDTFA’s online system or use other acceptable methods such as electronic funds transfer (EFT) or mail a check along with the return.
8. Maintain compliance: It’s important to stay up to date with your sales tax obligations, including filing returns and remitting payments on time. Failure to comply with sales tax requirements may result in penalties or other consequences.
Remember, specific procedures and requirements can vary depending on your jurisdiction and business circumstances. It’s advisable to consult with an accounting professional or refer to the guidelines provided by the relevant tax authority.
When Do You Pay Sales Tax In California?
The timing of sales tax payments to the government depends on the specific jurisdiction and the volume of your business’s sales. In California the CDTFA will determine your reporting and filing frequency based on your historical and assumed future sales. Here are some common payment schedules for sales tax:
1. Monthly: In many jurisdictions, businesses with a higher volume of sales are required to remit sales tax on a monthly basis. This means that the tax collected during a specific calendar month is typically due by a specified deadline in the following month.
In California, if your business has an average monthly sales tax liability of $17,000 or more, you are required to make monthly sales tax payments. The payment is due by the last day of the following month.
2. Quarterly: Some jurisdictions have a quarterly sales tax payment schedule for businesses with lower sales volumes. This means that the tax collected during a three-month period (e.g., a calendar quarter) is due by a specified deadline in the following month.
In California if your business has an average monthly sales tax liability between $501 and $16,999, you are eligible for quarterly sales tax payments. The quarters are divided as follows:
– Quarter 1: January to March, due by the last day of April.
– Quarter 2: April to June, due by the last day of July.
– Quarter 3: July to September, due by the last day of October.
– Quarter 4: October to December, due by the last day of January.
3. Annual: In some cases, businesses with very low sales volumes may have the option to pay sales tax on an annual basis. This means that the tax collected over the course of a full calendar year is due by a specified deadline early in the following year.
In California if your business has an average monthly sales tax liability of less than $500, you can choose to make annual sales tax payments. The payment is due by the last day of January for the previous calendar year.
If your sales tax liability exceeds certain thresholds during a calendar year, you may be required to change your payment frequency. For example, if your average monthly liability exceeds $17,000 during a calendar year, you will need to switch from quarterly to monthly payments the following year.
Sales Tax Newport Beach CA
The sales tax in Newport Beach is currently 7.75%
Santa Ana California Sales Tax
In Santa Ana California the sale and use tax rate is 9.25%.
Pasadena California Sales Tax
In Pasadena CA, the sales tax rate is 10.25%. The same rate applies in South Pasadena.
Fairfield CA Sales Tax
The sales and tax rate in Fairfield California is currently 8.375%.
Sales Tax Anaheim CA
In Anaheim CA the sales & tax rate is 7.75%
Oakland California Sales Tax
In Oakland CA the sales & tax rate is 10.25%
Still Got Questions?
If you need help figuring out sales tax in your business, whether you’re in California or not, get in touch with our team at Ease Support. We provide expert outsourced accounting, bookkeeping and tax services and can make sure you get this key area of your business right.
