As of October 1, 2017, our area Sales Tax rate is 9.50%.
What is taxable?
Retail sales of tangible personal property in California are generally subject to sales tax. Examples of tangible personal property include such items as office supplies, furniture, electronics, and so forth. In addition, some service and labor costs are subject to sales tax if they result in the creation of tangible personal property.
In some instances, retailers must pay use tax, rather than sales tax, to the Board. The most common example of a purchase subject to the use tax is a purchase of an item for use in California from an out-of-state retailer. Out-of-state retailers who are engaged in business in this state are required to collect the use tax, whenever applicable, from the consumer at the time of making the sale.
The tax rate for sales and use taxes is the same.
Some sales and purchases are exempt from sales and use tax. Examples of exempt sales include, but not limited to:
- Rentals of Linen Supplies
- Electronically delivered Software
For more information on exempt sales, please refer to publication 61, Sales and Use Taxes: Exemptions and Exclusions.
Is software taxable?
The sale or lease of a prewritten program is not a taxable transaction if the program is transferred by remote telecommunications from the seller's place of business, to or through the purchaser's computer and the purchaser does not obtain possession of any tangible personal property, such as storage media, in the transaction.
Likewise, the sale of a prewritten program is not a taxable transaction if the program is installed by the seller on the customer's computer except when the seller transfers title to or possession of storage media or the installation of the program is a part of the sale of the computer.
Are delivery and handling charges taxable?
Tax does not apply to delivery charges under the following conditions if the charges are clearly stated as a separate entry on the invoice or other bill of sale:
- The vendor has the property delivered directly to the customer using a common carrier, the U.S. Mail, or an independent contractor
If the delivery charges are not stated separately, they are taxable.
Tax applies to a delivery charge if the vendor uses a personal vehicle for the delivery, whether or not those charges are separately stated on the invoice.
Note: Tax does not apply to delivery charges using a personal vehicle if there is a written contract of sale, signed before delivery, that transfers ownership of the property to the purchaser prior to delivery.
Handling charges are generally taxable.
If a vendor charges a single amount for delivery and handling (for example, the invoice shows a single amount for "postage and handling" or "shipping and handling"), the portion of the charge that represents handling is generally taxable, while the portion that represents delivery may or may not be taxable.
Note: It is important for the vendor to use terms such as "delivery," "shipping," or "postage" on the invoice to represent delivery charges. A separately stated charge that says only "handling", for example, is not considered a delivery charge and the entire handling charge is taxable--even if postage or shipment charges are indicated on the package.
For more information on delivery charges, or information on how tax may apply to a specific transaction, please see Regulation 1628, Transportation Charges or publication 100, Shipping and Delivery Charges. You can also contact the Board of Equilization's Information Center at 1-800-400-7115 or your nearest Board office.