Source: CA Senate Bill 122; signed June 29, 2026 EFFECTIVE 1/1/2027

CA has long exempted digital software sales where no personal property was transferred from sales tax. This all changes effective 1/1/2027. On 1/1/2027, digital software downloads will be subject to CA sales tax at the normal rate for the seller’s jurisdiction.

Exemptions:

• Resale sales to other vendors with proof of resale permit from the vendor.
• Out-of-state sales where end user could be proven to be out-of-state.
• Specific digital transfer exclusions include music, video games, books, movies and digital visual works (e.g. photographs)

Without proof of an exemption, the assumption is that the sale is subject to sales tax.

Many software development companies will now have to apply for a resale permit with CDTFA and remit sales tax collected monthly, quarterly or annually. (The CDTFA sets the timing).