We recently received an email from a user of our website commenting that our table listing state sales tax rates is incorrect for California. The reason it may seem incorrect at first glance is that the table lists only state-level sales taxes, and excludes local option sales taxes that are not uniform across the state. The table lists California’s sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. rate as 8.25%, but California does in fact have local option sales taxes that push up the rate in many jurisdictions.
The state portion of the CA sales taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. is (as of April 1) 8.25% (which we list in our table), consisting of:
- 5.00% for the state general fund
- 0.25% for the state general fund effective 2004 (shifted from Bradley-Burns local tax)
- 0.50% distributed to local health/welfare programs
- 0.50% distributed to local public safety programs
- 0.75% Bradley-Burns tax, returned to the local jurisdiction where the sale occurred (this tax was 1% prior to 2004, when 0.25% was shifted to the state)
- 0.25% Bradley-Burns tax returned to the county where the sale occurred for transportation purposes
- 1.00% increase effective April 1, 2009, to the state general fund
Additionally, local governments can add up to 2% in local add-on sales taxes; a 0.5% transportation sales tax is quite common. Because these local option taxes are not uniform across the state we do not list them specifically in the general sales tax table. However, we have recently released a Fiscal Fact that addresses local option sales taxes. As of September 2009, the average local add-on sales tax in California was 0.81%, leading to an average combined sales tax for the state of 9.06%, the second highest of the fifty states (behind only Tennessee).
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