Retail sales of tangible items in California are generally subject to sales tax.
Examples include furniture, giftware, toys, antiques and clothing. Some labor service and associated costs are subject to sales tax if they are involved in the creation or manufacturing of new personal property.
Some items are exempt from sales and use tax, including:
- Sales of certain food products for human consumption (many groceries)
- Sales to the U.S. Government
- Sales of prescription medicine and certain medical devices
- Sales of items paid for with food stamps
Some sales are also nontaxable because the seller and/or purchaser meet certain criteria. A complete list is available in Sales and Use Tax: Exemptions and Exclusions (Publication 61). The Board of Equalization also has a series of questions and answers about the application of sales tax.
Note: In some cases, retailers must report use tax rather than sales tax. The most common example of a purchase subject to the use tax is a purchase of an item for use in California from an out-of-state retailer. Out-of-state retailers who are engaged in business in this state are required to collect the use tax, whenever applicable, from the consumer, at the time of the sale.