California's Sales Tax Rate and What It Covers
California's state sales tax is 7.25 percent, but the total tax you pay at checkout is usually higher because counties and cities add their own local taxes on top. Your final rate depends on where you live and shop — it can range from 7.25 percent in some areas to over 10 percent in others. The state collects its 7.25 percent share, then distributes portions to counties, cities, and special districts.
Sales tax applies to most goods you buy in stores, online, and by mail order — clothing, groceries, electronics, furniture, and thousands of other items. It does not explore to services like haircuts, car repairs, or dental work, even though you pay for them. Some items are exempt entirely, like prescription medications and medical equipment, but non-prescription drugs and vitamins are taxed.
You pay sales tax at the point of sale. The seller collects it from you and sends it to the state. If you buy something online from an out-of-state seller, California may still require sales tax if the seller has a physical presence in the state or meets certain sales thresholds — this changed significantly in recent years, so many online purchases now include California tax even if the seller is based elsewhere.
Key Takeaways
- California's state sales tax is 7.25 percent, but your actual tax rate is higher because your county and city add local taxes on top of the state rate.
- Sales tax applies to most goods but not to services, and some items like prescription medications are fully exempt.
- You pay sales tax at checkout, and the seller is responsible for sending the collected tax to the state.
- Online purchases from most major retailers now include California sales tax, even if the seller is based outside the state.
- Your exact tax rate depends on your location, so two purchases of the same item in different California cities may have different total costs.
How Your Local Tax Rate Is Calculated
The 7.25 percent state rate breaks down into four parts: 6 percent goes to the state general fund, 1.25 percent goes to counties, and the remaining amount is split among local districts. On top of this, your county adds its own rate, and your city may add another layer. A city in Los Angeles County, for example, might have a combined rate of 9.5 percent or higher.
You can find your exact local rate by entering your zip code on the California Department of Tax and Fee Administration website, or by asking a cashier at any store in your area. The rate can change if your city or county passes a new tax measure, though this happens infrequently. If you move within California, your tax rate may change even if you are still in the same county.
What Items Are Taxed and What Are Exempt
Most physical goods are taxed, but the rules have specific exceptions. Groceries — fresh produce, meat, dairy, and bread — are not taxed in California, but prepared foods, candy, and soda are. This means a raw chicken breast is tax-free, but rotisserie chicken from the deli counter is taxed. Seeds and plants you grow for food are also exempt, but plants grown purely for decoration are taxed.
Prescription medications are completely exempt from sales tax, but over-the-counter drugs like aspirin and cold medicine are taxed. Medical devices prescribed by a doctor — like diabetic test strips or hearing aids — are exempt, but similar items bought without a prescription are taxed. Clothing and footwear under $110 per item are exempt, but items over that threshold are fully taxed.
Services are generally not taxed. You do not pay sales tax on haircuts, plumbing repairs, medical exams, or legal information. However, if a service includes a tangible product — like a haircut that includes a taxable shampoo or a car repair that includes new parts — the product portion may be taxed separately.
Sales Tax on Online and Out-of-State Purchases
If you order from a major online retailer like Amazon, eBay, or Walmart, California sales tax is almost always included in your total, regardless of where the seller is based. This is because these companies have warehouses or other operations in California, which makes them responsible for collecting tax. The same applies to most national chains that ship to California.
Small sellers and out-of-state businesses without a California presence may not collect sales tax at checkout. If you buy from them and do not pay tax, you are technically responsible for paying use tax — a tax on items you bring into California or have shipped to you. In practice, most people do not pay use tax on individual purchases, but the obligation exists. If you run a business or make frequent large purchases, understanding use tax matters more.
Who Collects and Where the Money Goes
Retailers and online sellers are responsible for collecting sales tax from you and sending it to the California Department of Tax and Fee Administration. They do this monthly or quarterly, depending on their sales volume. The state then distributes the revenue according to a formula: some goes to the state budget, some to counties, some to cities, and some to special districts like transit agencies or school districts.
This distribution system means that a purchase made in one city benefits that city's budget, while a purchase made in a neighboring city benefits the neighboring city instead. This is why cities sometimes compete for retail development — the sales tax revenue stays local.
Sales Tax on Specific Items You Might Question
Gas and diesel fuel are taxed at the pump, and the tax rate is the same as your local sales tax rate. Alcohol — beer, wine, and spirits — is taxed at the regular sales tax rate, plus there are separate excise taxes that the state and federal government collect. Cigarettes and vaping products are taxed at the regular rate, plus a separate state excise tax.
Vehicles are taxed, but the calculation is more complex. You pay sales tax based on the purchase price, but you may also owe use tax if you buy out of state. Rental cars have their own tax structure. Lottery tickets are not subject to sales tax, but winnings are subject to income tax.
Memberships and subscriptions — gym memberships, streaming services, software subscriptions — are generally taxed. Digital products like e-books, downloaded music, and apps are taxed. However, some subscriptions may be exempt depending on what they provide; for example, a newspaper subscription might be treated differently than a streaming service.
How Sales Tax Affects Your Budget
Sales tax is a hidden cost that many people forget to account for when budgeting. If something is priced at $100 and your local tax rate is 8.5 percent, you actually pay $108.50. Over a year, this adds up — a family that spends $30,000 on taxable goods pays roughly $2,550 in sales tax if their rate is 8.5 percent.
Sales tax hits lower-income households harder than higher-income ones, because lower-income people spend a larger share of their money on taxable goods like food and clothing. Wealthier people spend more on services and investments, which are not taxed. This is why some people argue sales tax is regressive, even though it applies equally to everyone.
Frequently Asked Questions
Why is my sales tax different from the state rate of 7.25 percent?
Your county and city add local sales taxes on top of the state rate. These local rates vary by location and can range from zero to several percentage points. The total you pay is the sum of all these layers. You can find your exact rate by zip code on the California Department of Tax and Fee Administration website.
Do I have to pay sales tax on groceries?
Most groceries are exempt — fresh produce, meat, dairy, bread, and eggs are not taxed. However, prepared foods, candy, soda, and hot foods are taxed. The rule is roughly: if it is ready to eat or a luxury food item, it is taxed; if it is a basic ingredient, it is not.
What is use tax and do I have to pay it?
Use tax is a tax on items you bring into California or have shipped to you when sales tax was not collected at purchase. You are technically responsible for paying it on out-of-state purchases, but enforcement is limited for individual consumers. Businesses are expected to track and pay use tax more carefully.
Are online purchases always taxed?
Most major online retailers now collect California sales tax automatically. However, some small sellers and out-of-state businesses may not. If you do not see tax added at checkout, you may owe use tax, though this is rarely enforced for individual purchases.
Is sales tax the same everywhere in California?
No. The state rate is 7.25 percent everywhere, but counties and cities add different amounts. Your total rate depends on your zip code and can range from 7.25 percent to over 10 percent. If you move or shop in a different city, your rate may change.