State Sales Tax Rates

State Sales Tax Rates California State Sales Tax 2014

California Sales Tax 2014
California State Sales Tax for 2014 Maximum Municipal Sales Tax

7.25%

2.00%

What is the California Sales Tax?

The California state sales tax is 7.25%, with a maximum possible sales tax (including local and municipal sales taxes) of 9.25%.

Local governments in California are allowed to add a local sales tax of up to 2 percent on top of the CA state sales tax for all qualifying sales in their jurisdiction - so the actual sales tax paid on any purchase in California can be up to 9.25% depending on location.

California has the highest state sales tax in the United States, partially because reduced property tax rates enacted by Proposition 13 in 1978. Additional local sales taxes can be added to the state sales tax, with voter approval, by a variety of governmental districts including cities, counties, and service authorities. San Francisco charges a 1.5% local sales tax, while South Gate and Poca Rivera both charge the maximum allowed local tax rate of 3.5%.

The 8.25% California state sales tax is broken up by percentage and allocated to various funds for governmental use. The sales tax is allocated as follows:

  • 8.25% - State + Local
    • 7.25% - State
      • 6.00% - State - General Fund
      • 0.25% - State - Fiscal Recovery Fund
      • 0.50% - State - Local Revenue Fund
      • 0.50% - State - Local Public Safety Fund
    • 1.00% - Uniform Local Tax
      • 0.25% - Local County - Transportation funds
      • 0.75% - Local City/County - Operational funds

California has a very complicated sales tax code, and has multiple special rules in place for a variety of transaction types. Services are not subject to sales tax in California, but many items exempt from sales tax elsewhere (such as gasoline). Partial exemptions also exist for a number of items, such as farm machinery.

California Sales Tax on Online Sales - Legislation to mandate the collection of sales tax by out-of-state corporations selling items to California residents, especially online retailers such as Amazon, has been intorduced several times only to be vetoed by then-governer Arnold Schwarznegger. Several assembly members have continued to push for online sales to be taxed, and the matter remains a controversial issue in California politics.

What sales are exempt from the California Sales Tax?

California Sales and Use Tax Rates

Many states set special sales tax rates for certain types of goods like groceries or clothes, and may completely exempt certain transactions from state and local sales taxes. California completely exempts unprepared food and groceries, and prescription drugs from the California state sales tax.

California does not have special sales tax rates for certain types of purchase, a common practice in many states for goods such as food and clothing.While many other states also collect a special (and often higher) sales tax on prepared and restaraunt food, California does not have a specific restaraunt sales tax.

Generally, the California sales tax is collected only from the end consumer, or the end user of the product. Customers buying products in bulk, as a business-to-business transaction, or buying with the intent to resell do not have to pay the California sales tax if they provide the seller with a California Sales Tax Exemption Certificate at the time of purchase. Most states will accept the Uniform Sales and Use Tax Certificate for this purpose, which is available from the Multistate Tax Commission here.

Internet Sales Tax, or tax on purchases made over the internet, is currently a gray area in many states' tax codes. While most states can collect sales tax on internet purchases made within the state (the vendor and consumer are both located in California), taxation of interstate internet transactions is much more complicated.

Currently New York, Rhode Island, North Carolina, Colorado, and Illinois have some form of online sales tax that also handles interstate transactions. For details on how California handles taxation of online sales, read more about online sales taxes in the United States.

Resources:

[1] Table of state sales taxes on Wikipedia
http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#By_jurisdiction

[2] California sales tax information on Tax-Rates.org
http://www.tax-rates.org/California/sales-tax

[3] Table of state sales, use, and excise taxes by The Tax Foundation
http://www.taxfoundation.org/taxdata/show/245.html

[4] State level taxation resources on IRS.gov
http://www.irs.gov/businesses/small/article/0,,id=99021,00.html