California Sales Tax on Digital Products (2026)

Last reviewed: August 15, 2026 — tax law changes; verify with the California Department of Tax and Fee Administration

Selling ebooks, courses, templates, or software to buyers in California? As of August 2026, California does not tax most digital products delivered electronically. But the ground is shifting: a law signed in June 2026 makes electronically delivered software and SaaS taxable starting January 1, 2027 — and physical-media versions of any digital product have always been taxable. Here is where things stand.

The quick answer

As of August 2026, California generally does not impose sales tax on digital products delivered electronically. California sales tax applies to tangible personal property, and the CDTFA's Publication 109 (Internet Sales) states that sales of electronic data products — software, data, digital books (ebooks), mobile applications, and digital images — are generally not taxable when the data is transmitted to the customer over the internet. For software specifically, Regulation 1502 confirms that a prewritten program transferred by remote telecommunications is not taxable when the purchaser obtains no tangible personal property in the transaction.

Two big caveats. First, delivery method decides everything: the same product on a flash drive or disc — or bundled with a printed copy or backup physical copy — is tangible personal property, and Publication 109 says the entire sale is then usually taxable. Second, the rules change on January 1, 2027. Under Senate Bill 122, signed June 29, 2026, prewritten software becomes taxable whether it is delivered on physical media, transferred electronically, or accessed remotely (SaaS), as summarized by RSM and PwC. Non-software digital goods — ebooks, music, streaming, video games, digital art, NFTs — remain exempt under the new law per those summaries. The CDTFA's own publications had not yet been updated for SB 122 as of Publication 109's July 2026 revision, so watch for official implementation guidance before the effective date.

What's taxable and what isn't

The table below summarizes California's general treatment by category — both the current rules and what changes under SB 122. Classification of an individual product is ultimately the CDTFA's call, not ours, and the 2027 column reflects secondary summaries of a law the CDTFA has not yet issued detailed guidance on.

The pattern to remember for 2026: in California the delivery method drives taxability. The identical ebook or program can be exempt as a pure download and taxable the moment any tangible property changes hands. From 2027, software sellers lose that distinction — prewritten software becomes taxable in every delivery form — while sellers of ebooks, courses, art, and other non-software digital goods keep it.

Rates

When California sales tax does apply (for digital sellers today, mainly physical-media versions and bundles — and from 2027, prewritten software), the numbers per the CDTFA's sales and use tax rates page (rates effective July 1, 2026) are:

• Statewide base rate: 7.25% — the rate that applies everywhere in California before local additions.
• District taxes: 0.10% to 2.00% each — voter-approved district taxes layered on top of the base rate by cities, counties, and special districts. More than one district tax can apply at a single address, so combined rates vary meaningfully across the state.

Because the combined rate depends on the delivery address, there is no single "California rate" you can hard-code. The CDTFA publishes a rate lookup by address on the same page — use it, or a checkout that calculates by address. Note for remote sellers: per Publication 109, a retailer that crosses the $500,000 threshold (next section) is considered engaged in business in every district, and so collects each buyer's district taxes, not just the statewide rate.

Economic nexus: when remote sellers must register

Since South Dakota v. Wayfair (2018), states can require out-of-state sellers to collect sales tax based on sales volume alone. California's rule, adopted in AB 147 and effective April 1, 2019, is described in Publication 109: a remote seller must register when its total combined sales of tangible merchandise for delivery in California — by the seller and all persons related to it — exceed $500,000 in the preceding or current calendar year.

Two things make California's threshold unusual. First, the number: $500,000, five times the $100,000 figure most states use, and with no transaction-count test at all — 200 low-priced sales into California do not by themselves create nexus. Second, the base: the threshold counts sales of tangible personal property. A seller whose California sales are entirely electronically delivered digital products is generally not selling tangible personal property under current law — but whether each of your products is actually outside the tax is a classification question for the CDTFA, and SB 122's redefinition of taxable software from 2027 may change what counts for sellers of software and SaaS. If you are near the threshold or unsure, ask the CDTFA or a tax professional before deciding not to register.

Marketplace facilitator rules

Under California's Marketplace Facilitator Act, effective October 1, 2019, a marketplace facilitator that is registered (or required to be registered) with the CDTFA is the retailer responsible for collecting and paying the tax on sales it facilitates for delivery into California. The same $500,000 combined-sales threshold determines when a facilitator is required to collect.

If your California sales run exclusively through a registered marketplace, you generally do not need your own seller's permit for those sales — but the CDTFA expects you to keep documentation showing the facilitator is registered and collecting, and sales through your own website remain your responsibility to track against the threshold. Sellers who split volume between a marketplace and their own checkout need to monitor the direct-sales side separately.

Registering and filing

If you determine you must collect California sales or use tax, register before making taxable sales. Registration is handled through the CDTFA's Taxpayer Online Services Portal — select "Register a New Business Activity" and follow the prompts, per Publication 109. Once registered, you file returns and remit through the same portal on the schedule the CDTFA assigns, collecting the statewide rate plus the district taxes that apply to each delivery address. Keep the CDTFA's rates page bookmarked — district rates change during the year.

The multi-state picture

California's current exemption only covers California buyers. If you sell digital products nationwide, at least 41 states plus DC tax some form of digital goods, each with its own definitions and thresholds — our state-by-state guide to sales tax on digital products maps the landscape, and the Digital Seller's Sales Tax Checklist condenses the compliance steps into a printable two-pager. SurcoPay's built-in tax tooling tracks your sales against each state's economic nexus threshold so you know when a new registration obligation is approaching.

FAQ

Does California charge sales tax on digital products?

Generally no, as of August 2026. Per CDTFA Publication 109, sales of electronic data products such as software, ebooks, mobile applications, and digital images are generally not taxable when transmitted over the internet. The same product on physical media is taxable. Note the major change ahead: under SB 122, electronically delivered prewritten software and SaaS become taxable on January 1, 2027. This is general information, not tax advice; verify with the CDTFA.

Is SaaS taxable in California?

Not as of August 2026 — remotely accessed software where the customer receives no tangible personal property is generally outside California sales tax. That changes on January 1, 2027: SB 122 (signed June 29, 2026) makes prewritten software taxable whether delivered on physical media, downloaded, or accessed remotely as SaaS. Custom software remains exempt. Watch for CDTFA implementation guidance before the effective date.

What is California's economic nexus threshold?

More than $500,000 in total combined sales of tangible personal property for delivery into California by you and persons related to you, in the preceding or current calendar year (AB 147, effective April 1, 2019). California has no transaction-count test — a notable difference from the $100,000 or 200-transaction thresholds common elsewhere.

Sources

Official CDTFA pages relied on for this guide:

• CDTFA — Publication 109, Internet Sales ($500,000 threshold, district-tax rule for remote sellers, registration steps)
• CDTFA — Publication 109, Nontaxable Sales (electronic data products; bundling with physical copies)
• CDTFA — Regulation 1502, Computers, Programs, and Data Processing (electronic delivery of prewritten software; custom software)
• CDTFA — California City & County Sales & Use Tax Rates (7.25% base rate; district taxes; address lookup)
• CDTFA — Tax Guide for Marketplace Facilitator Act
• CDTFA — Taxpayer Online Services Portal (registration and filing)

Secondary references used to cross-check, including for SB 122 (2027 change):

• RSM — California expands sales tax to electronically delivered software
• PwC — California to impose sales and use tax on digital products including prewritten software and SaaS

Keep reading

• Do You Need to Collect Sales Tax Selling Digital Products? A State-by-State Guide
• The Digital Seller's Sales Tax Checklist (free download)
• Florida Sales Tax on Digital Products (2026)
• New York Sales Tax on Digital Products (2026)
• Platform Fee Calculator