Out of the 45 U.S. states that charge a state sales tax — a tax charged at the point of sale as a percentage of the total purchase — California’s sales tax rate is one of the highest.
The base California tax rate on sales is 6 percent, but that doesn’t include the mandatory add-on of 1.25 percent that goes directly to county and local governments. Looking at sales tax by state, that statewide rate of 7.25 percent is the highest in the country.
But many cities and counties have additional sales taxes on top of the 7.25 percent rate to raise more revenue, so the effective rate in your area can be different from others in the state. California’s high statewide rate, however, still translates to just the ninth-highest average sales tax rate in the U.S. at 8.54 percent after combining state and local rates.
Here’s everything you need to know about sales tax in California:
|California State Sales Taxes|
|Mandatory Local Add-On||1.25%|
|Local Rate Range||0% to 3%|
|Total Rate Range||7.25% to 10.25%|
California State Tax by County
Although each county is getting a cut of the 1.25 percent add-on to California’s tax rate, many counties have a variety of different expenses and might charge a higher rate to cover their costs. Calaveras and Modoc counties, for example, don’t add any additional sales tax, but the rest of the state’s counties have add-on ranges between 0.5 percent and 3 percent. The most common markup, though, is 0.5 percent, with 22 of California’s 58 counties charging an additional half-percent.
|California Sales Tax by County|
|County||Total Sales Tax|
|San Luis Obispo||7.25%|
City Sales Taxes in California
And, there’s also the local sales taxes to consider as many cities raise additional revenue by way of sales tax added on top of state and county rates. The greater Los Angeles area, for instance, has several places with significantly higher rates. Residents of Los Angeles proper are paying a whopping 9.5 percent on every purchase, and the people living in the cities of Compton, Santa Monica and Long Beach all have rates of 10.25 percent.
What Is Exempt From California Sales Tax?
California taxes a variety of goods and services at the point of sale, but most of them are only relevant to businesses or vendors. For the average consumer, the main sales tax exemptions to remember are those related to what the state defines as basic necessities. Food that is not prepackaged or served at a restaurant or the cost of your rent and utilities, for instance, are all exempt from sales tax.
How Is California Sales Tax Money Spent?
Administered by the California Board of Equalization, California sales tax in 2018 accounted for $26.7 billion of the state’s $133.3 billion in total revenue — almost exactly 20 percent. But of the 7.25 percent sales tax rate, just 3.9375 percent goes into California’s general fund, and 1.0625 percent is allocated toward the local revenue fund, according to Ballotpedia.
Sales tax is also an important revenue source for county, city and local governments. The 1.25 percent mandatory add-on directs 1 percent to local city and county operating funds and 0.25 percent to local county transportation funds. Another 1.0625 percent, however, goes to the state’s Local Revenue Fund; 0.5 percent goes to the Local Public Safety Fund for Criminal Justice; and 0.5 percent goes to the Local Revenue Fund for Health and Social Services.
Many of those allocations represent legally required distributions that are spelled out specifically in laws or the state constitution.
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