Everything You Need To Know About Sales Tax In California But Were Afraid To Ask

Learn how to calculate and apply California sales tax to stay compliant and avoid penalties

Do We Really Need To Pay State Tax, County Tax, Local Tax And District Tax In Paying Sales Tax In CDTFA?

Yes, in California, when paying sales and use tax to the California Department of Tax and Fee Administration (CDTFA), you’re typically paying a combined rate that includes:

1. State Sales Tax

2. Local Tax (applies in all counties)

3. County Tax (often overlaps with local tax)

4. District Tax (varies by location—can be one or more)

Here’s how it works:

• The base statewide sales tax rate is 7.25%, which includes:

• 3.9375% for the state

• 1.00% for local (city/county operations)

• 0.25% for county transportation

• 2.00% for state and local funds, like education and public safety

• Additional district taxes are imposed on top of the 7.25% in many areas by

  counties, cities, or special taxing districts (e.g., transit, hospitals).

How Much Is Sales Tax In California?

California has a statewide tax rate of 7.25%, but the total tax can be higher depending on where you do business. Here’s how it works:

7.25% is the minimum tax rate statewide. It includes 6% for the state and 1.25% for local city and county funding.

Some areas charge extra district taxes, between 0.1% to 2%, which can raise the total tax rate. Some areas may have more than one district tax in effect.

The total tax rate you charge is the sum of the statewide tax plus any local district tax. Your business must report and pay both local and state sales tax for all taxable sales and purchases.

California Sales Tax Rate By County

The total tax you charge customers will depend on where your business operates. Counties and cities can add additional district taxes, causing rates to vary across the state, with some climbing over 10%.

Charging the correct sales tax ensures your business is in compliance with state regulations and can help you avoid costly penalties when you file your returns.

How To Calculate Sales Tax In California

If you are a first-time business owner, understanding how to calculate California sales tax can be overwhelming. Follow the steps below or use our sales tax calculator to help determine the tax to charge.

Calculating tax starts with a simple formula: Sales Tax = Tax Rate x Item Price.

Once you have the sales tax amount, simply add it to the product price to get the total cost you’ll charge the customer.

To Calculate Sales Tax Rates:

Convert the tax rate to a decimal: Divide the tax rate by 100. For the California sales tax rate of 7.25%, this would be 7.25% / 100 = 0.0725.

Calculate the tax amount: Multiply the item price by the tax rate. If an item costs $15.95, this would be 0.0725 (tax rate) x $15.95 (item price) = $1.15 in sales tax.

Example:

If you’re located in Los Angeles, the total sales tax rate might be around 9.5% or higher, depending on the city or district-specific taxes.

Important Notes:

• The CDTFA collects all these taxes on your behalf through a single return.

• You don’t pay them separately—you collect and report the full rate based on your business location (or where the sale is considered to take place).

• If you’re selling into multiple jurisdictions (like online sales), you must apply the correct rate based on the destination of the goods.

What You Should Do:

• Use the CDTFA’s online tax rate lookup tool to determine the correct combined rate for each location:

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