Introduction
If your business sells tangible goods in California, you’re likely required to collect, report, and remit California sales tax. Whether you’re a retail store, online seller, or food vendor, this guide will help you file and pay sales tax accurately in 2025.
What Is Sales Tax in California?
Applicable Code: IRC §164; California Revenue & Taxation Code §§ 6051–6203
Sales tax is a consumption tax imposed on the retail sale of tangible personal property in California. Businesses act as tax collectors and must remit collected sales tax to the California Department of Tax and Fee Administration (CDTFA).
Who Needs to Collect Sales Tax?
You must collect sales tax if your business:
- Has a physical presence (nexus) in California
- Sells taxable goods or certain services
- Makes over $500,000 in sales into California (economic nexus threshold)
Includes both in-state retailers and remote sellers shipping to California.
California Sales Tax Rates in 2025
The statewide base rate is 7.25%, but local jurisdictions can add additional district taxes.
In some cities, the combined rate can reach 10.75% or higher.
Use the CDTFA Rate Lookup Tool to determine your exact rate by address.
How to Register with the CDTFA
Step-by-Step Registration:
- Visit cdtfa.ca.gov
- Click “Register a New Business”
- Choose Sales and Use Tax Account
- Provide business structure, FEIN/SSN, address, and NAICS code
- Receive your Seller’s Permit after approval
Step-by-Step Guide to Filing Sales Tax
Step 1: Log in to Your CDTFA Account
Use your login credentials at cdtfa.ca.gov
Step 2: Select Your Sales Tax Filing Period
Choose quarterly, monthly, or annual filing—based on CDTFA assignment.
Step 3: Report Gross Sales
Include all taxable and non-taxable sales.
Step 4: Enter Deductions
Common deductions:
- Sales for resale
- Out-of-state sales
- Nontaxable services
Step 5: Calculate Tax Due
System calculates based on your local rate.
Step 6: Submit Return and Pay
You can pay by ACH debit, credit card, or check.
Due Dates & Filing Frequencies
Filing frequency depends on your annual taxable sales:
| Sales Volume | Frequency | Due Date |
|---|---|---|
| $0–$100,000 | Annually | Jan 31 |
| $100K–$499K | Quarterly | Last day of month following quarter |
| $500K+ | Monthly | Last day of following month |
Penalties for Late Filing or Payment
| Violation | Penalty |
|---|---|
| Late filing | 10% of tax due |
| Late payment | 10% + interest |
| Fraudulent reporting | Up to 25% penalty + criminal charges |
Always file on time—even if you owe nothing, to avoid penalties.
Conclusion
California’s sales tax system is complex due to varying local rates and detailed filing requirements. Staying compliant starts with registering properly, collecting accurately, and reporting on time—every time.
Call to Action
Need help setting up your CDTFA account or managing your California sales tax compliance?
Schedule a consultation with Anshul Goyal, CPA EA FCA, a U.S.-licensed Certified Public Accountant and IRS Enrolled Agent who helps businesses file accurately and avoid costly penalties.
📅 Book your appointment here
FAQs – Sales Tax in California
Q1: Do I need to collect sales tax if I only sell online?
Yes, if you meet the $500,000 sales threshold into California or have a physical presence.
Q2: What’s the penalty for not filing a sales tax return?
10% of tax due, even if no sales occurred—and interest accrues monthly.
Q3: Are services taxable in California?
Most services are not taxable, but some, like fabrication and repair, are.
Q4: Can I file sales tax returns manually?
Yes, but CDTFA recommends e-filing for accuracy and faster processing.
Q5: What if I overpaid sales tax?
You can file an amended return or request a refund through CDTFA.
About Our CPA
Anshul Goyal, CPA EA FCA is a Certified Public Accountant licensed in the U.S., a Federally Authorized Tax Practitioner, and a Fellow Chartered Accountant from India. With more than 15 years of experience in business tax, sales tax compliance, and cross-border consulting, Anshul has helped over 2,000 clients and saved over $200 million in taxes.
Disclaimer
This article is for informational purposes only and does not constitute tax, legal, or accounting advice. Always consult a certified tax professional for guidance tailored to your specific business and location.