Luckily I live in California! We have the highest MINIMUM sales tax rate.
California’s state and local governments levy a tax on retail sales of tangible goods. This tax has two parts:
Sales Tax on Retailers. When California retailers sell tangible goods, they generally owe sales tax to the state. Retailers typically add sales tax to the price they charge customers and show it as a separate item on sales receipts.
Use Tax on Buyers. State law requires buyers to pay a use tax on certain purchases of tangible goods if the retailer does not pay California sales tax. Some internet purchases from out–of–state retailers fall into this category. The use tax rate is the same as the sales tax rate.
Detailed Description of the Sales & Use Tax Rate
Overall, our tax rate is 7.25% -- Below is a break-down of how this 7.25% is used, including rate, jurisdiction, purpose and authority.
PLUS... The tax rate in each California area may be higher than 7.25% depending on the district taxes that apply there.
While the statewide tax rate is 7.25%. In most areas of California, local jurisdictions have added district taxes that increase the tax owed by a seller. Those district tax rates range from 0.10% to 1.00%. Some areas may have more than one district tax in effect. Sellers are required to report and pay the applicable district taxes for their taxable sales and purchases.
Sales Tax Applies to Tangible Goods
California levies its sales tax on the retail sale of tangible personal property. State law defines these terms as follows:
“Retail sale” excludes goods that businesses purchase for resale. It also generally excludes materials that go into products.
“Tangible” generally refers to physical materials that people can touch. Products that are not tangible—such as services or digital goods—are not subject to sales tax.
“Personal property” is movable from one place to another. Real property—land and things that are attached to land, like buildings—is not subject to sales tax.
California’s sales tax applies to a retailer’s sales to most buyers, including individuals, businesses, nonprofit and religious organizations, and California’s state and local governments. However, sales to some buyers, such as the federal government, are exempt from tax.
Sales Taxes on Discounted Goods. When a retailer sells a taxable good at a discount—through a club card, a retailer’s coupon, or an online “deal of the day”—the retailer generally calculates sales taxes based on the product’s discounted price, not its full retail price. However, for some types of discounts, sales tax applies to the full retail price before the discount is applied. Specifically, if the customer compensates the retailer for the discount—for example, by trading in a used car—then sales tax generally applies to the full retail price, not the discounted price. In addition, if the discount is available only through a bundled transaction (such as a mobile phone purchased together with a service contract), then sales tax applies to the full unbundled price of the taxable good (the full retail price of the mobile phone).
Sometimes, California consumers buy tangible goods from retailers who do not collect California sales tax. Those consumers generally owe use tax. For example, use tax is due in these common situations:
Bringing Out–of–State Purchases Into California. Californians purchase tangible goods while they are traveling outside of the state. When they use those goods in California, they owe California use tax.
Making Online Purchases From Out of State. Sales tax applies to tangible goods Californians purchase over the Internet. If the seller does not collect the tax on a taxable item (possibly because the seller is not located in California), the consumer owes use tax.
Buying a Car From a Private Party. Individuals often sell used cars directly to other individuals. When this happens, the purchaser owes use tax. (Individuals who frequently sell used cars, however, are required to register as a retailer with the BOE and pay sales taxes.)
As discussed later in this report, many Californians are not familiar with the use tax, and compliance with this tax is uneven.
And so on and so forth, blah, blah, blah...
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