The Bradley-Burns California sales tax is a 1.25% local sales and use tax built into the state’s 7.25% base rate, with revenue flowing to the city or county where each retail sale takes place. Of that 1.25%, a full 1% goes to the local jurisdiction for general spending, and 0.25% is earmarked for county transportation funds that pay for transit and roads.1California State Auditor. The Bradley-Burns Tax and Local Transportation Funds Every county and every incorporated city in California imposes the tax at the same 1.25% rate, so the Bradley-Burns portion itself never varies from one place to another.
Why the Rate on Your Receipt Isn’t 7.25%
The 7.25% statewide base is only the starting point. On top of it, local jurisdictions can layer district taxes under the Transactions and Use Tax Law, at rates ranging from 0.10% to 2.00%, and some areas stack multiple district taxes together.2California Department of Tax and Fee Administration. California City and County Sales and Use Tax Rates A sale in one city might carry a combined rate of 7.25%; a sale a few miles down the road might be taxed above 10%.
Sellers are responsible for charging the correct combined rate for the actual transaction location, not just the state base. The CDTFA maintains an address-level rate lookup at maps.cdtfa.ca.gov, and the agency itself warns that a zip code alone is not enough because district boundaries do not always follow postal boundaries.3California Department of Tax and Fee Administration. Know Your Sales and Use Tax Rate
Which City or County Gets the Money
Because the 1% discretionary portion follows the “place of sale,” the local jurisdiction receiving that revenue depends on where the transaction is deemed to occur. For a business with a single California location, every sale is treated as happening at that location.4California Department of Tax and Fee Administration. California Code of Regulations Title 18, Article 19 – Regulation 1802
Multi-location businesses are more complicated. If only one of your locations participates in a sale, that location gets the credit. When more than one is involved, the sale is allocated to the place where the principal negotiations happen. Forwarding an order elsewhere for credit approval, shipping, or billing does not shift the allocation.4California Department of Tax and Fee Administration. California Code of Regulations Title 18, Article 19 – Regulation 1802 Misallocations trigger revenue disputes between local governments, and the CDTFA will step in to correct them, so point-of-sale systems and accounting processes need to track which location handles each transaction.
What’s Taxable
Bradley-Burns applies to retail sales of tangible personal property: any physical item that can be seen, weighed, measured, or touched. Electronics, furniture, clothing, and building materials are all taxable at retail. Services on their own are generally not taxable, but the line blurs when a service is bundled with a physical product. Mandatory installation charges tied to the sale of equipment, for example, may be taxable because they are inseparable from the sale of goods.
Shipping and Handling
Shipping charges are not taxable when three conditions are all met: the item ships directly to the buyer by common carrier, contract carrier, or U.S. Mail; the shipping charge appears as a separate line on the invoice; and the amount does not exceed your actual delivery cost.5California Department of Tax and Fee Administration. Shipping and Delivery Charges – Publication 100
Handling is different. Combine shipping and handling into a single line item and the handling portion is taxable, and the shipping portion may become taxable too. Separately stated fuel surcharges added on top of actual shipping costs are also generally taxable. The safer approach is to break out actual shipping on its own line and keep handling separate.5California Department of Tax and Fee Administration. Shipping and Delivery Charges – Publication 100
Exempt Categories
Groceries sold for home consumption are exempt. That covers fruits, vegetables, meat, dairy, bread, canned goods, and similar staples.6California Legislative Information. California Code RTC 6359 – Food Products The exemption does not apply to hot prepared foods, restaurant food sold for on-premises consumption, vending machine food, or alcoholic and carbonated beverages. A business selling both exempt groceries and taxable prepared food must track and report those categories separately.
Prescription medications are exempt when prescribed by an authorized provider and dispensed by a registered pharmacist, or when furnished directly by a licensed physician, dentist, or podiatrist to a patient. Certain prosthetic devices worn on or in the body to replace or assist a natural body part also qualify. Hearing aids, ophthalmic devices, and dental prosthetics are specifically excluded from the medicine exemption and remain taxable.7California Legislative Information. California Code RTC 6369 – Prescription Medicines
Sales to the federal government are generally exempt, and certain sales to California state and local government agencies may be as well. Nonprofits do not get a blanket pass. Being exempt from income tax under Internal Revenue Code Section 501(c)(3) does not exempt an organization from California sales tax on its purchases, and the CDTFA’s own guidance makes clear there is no general exemption for nonprofits.8California Department of Tax and Fee Administration. Nonprofit Organizations – Publication 18 Narrow exemptions exist for specific nonprofit activities, but organizations that assume they are broadly exempt frequently run into trouble during audits.
Resale Certificates
Every sale of tangible personal property in California is presumed taxable unless the seller can prove otherwise. A resale certificate is the primary way to overcome that presumption: the buyer documents that goods are being purchased for resale rather than personal use, and the seller does not collect tax on the transaction.9California Department of Tax and Fee Administration. California Revenue and Taxation Code 6091 – Presumption of Taxability, Resale Certificate
Under CDTFA Regulation 1668, a valid resale certificate must include:
- The signature of the purchaser, an employee, or an authorized representative.
- The name and address of the purchasing business.
- The buyer’s seller’s permit number, or an explanation of why one isn’t required (for example, because the buyer only sells nontaxable items or makes no sales in California).
- The exact words “for resale.” Phrases like “nontaxable” or “exempt” do not count.
- An itemized list or general description of the goods being purchased for resale.
- The date the certificate was signed. A missing date alone will not invalidate an otherwise complete certificate.
If you sell goods without collecting tax and later cannot produce a valid resale certificate, you are personally liable for the uncollected tax.10California Department of Tax and Fee Administration. Regulation 1668 – Sales for Resale This is one of the most common audit findings, so wholesalers and manufacturers should build certificate collection into their standard sales process rather than trying to gather them after the fact.
Out-of-State Sellers, Nexus, and Marketplaces
A business does not need to be located in California to owe Bradley-Burns tax. Any retailer with substantial nexus in the state must register, collect, and remit. Nexus can be physical, through a warehouse, office, or sales representatives operating in California. It can also be purely economic: a retailer whose total combined sales of tangible goods delivered into California exceed $500,000 in the current or prior calendar year has nexus regardless of physical presence.11California Legislative Information. California Code RTC 6203 – Collection by Retailer
Since October 1, 2019, California’s marketplace facilitator law (AB 147) requires platforms such as Amazon, eBay, and Etsy to collect and remit sales tax on behalf of third-party sellers for sales made through their marketplaces.12California Legislative Information. AB 147 – Use Taxes, Collection, Retailer The facilitator is treated as the seller for tax purposes on those transactions. Sales made through a marketplace still count toward a seller’s own $500,000 economic nexus threshold, so even if a platform handles tax collection for you, you may still need to register independently once your total California sales cross that line.
When a California resident buys taxable goods from an out-of-state retailer that doesn’t collect sales tax, the buyer owes use tax at the same combined rate. Every person who stores, uses, or consumes taxable goods in California that were purchased without tax is liable.13California Legislative Information. California Code RTC 6202 – Liability for Tax Individuals report use tax on their California income tax return; businesses report it on their sales and use tax returns.
Getting a Seller’s Permit and Filing Returns
Any business making retail sales of tangible personal property in California must obtain a seller’s permit from the CDTFA before its first sale. There is no fee, though the CDTFA may require a security deposit depending on business type and expected sales volume.14California Department of Tax and Fee Administration. Get a Sellers Permit The application asks for your Social Security number, government ID, bank information, supplier names and addresses, and projected monthly sales. Partners, corporate officers, and LLC managers each provide their own identifying information. Businesses planning to sell for fewer than 90 days, such as at a seasonal market, can apply for a temporary seller’s permit instead.
Once registered, you file returns that cover state, local, and district sales and use taxes together. The CDTFA assigns your filing frequency (monthly, quarterly, or annually) based on your tax liability, and businesses operating in district-tax areas may need to file supplemental schedules identifying sales by district.
Audits, Appeals, and Penalties
The CDTFA requires sellers to retain sales and use tax records for at least four years, including invoices, receipts, resale certificates, bank statements, purchase orders, and point-of-sale data. If your POS system overwrites data sooner, you have to preserve it externally.15California Department of Tax and Fee Administration. Sales and Use Tax Records – Publication 116
The standard audit look-back is three years from the date you filed a return. Fail to file at all and the window stretches to eight years. Where fraud or intent to evade is involved, there is no firm time limit.15California Department of Tax and Fee Administration. Sales and Use Tax Records – Publication 116 Common audit findings include mismatched or missing resale certificates, inconsistent reporting across locations, and gaps between reported sales and bank deposits. When the CDTFA determines you underpaid, it issues a Notice of Determination stating the amount owed plus penalties and interest.
You have 30 days from the mailing date of that notice to file a petition for redetermination.16California Department of Tax and Fee Administration. Audit Manual Chapter 14 – Appeals Procedures Miss the window and the determination becomes final, collection can begin, and a late petition may be rejected outright.
What Noncompliance Costs
- Late filing or payment carries a 10% penalty on the unpaid tax, plus interest that accrues monthly.17California Department of Tax and Fee Administration. California Revenue and Taxation Code 6591 – Interest and Penalties
- Collecting sales tax from customers and knowingly failing to remit it triggers a 40% penalty on the unremitted amount. The CDTFA treats this as its most serious civil violation because the business has effectively kept money that belongs to the state.18California Legislative Information. California Code RTC 6597 – Penalty, Tax Reimbursement Collected and Not Timely Remitted
- Any deficiency resulting from fraud or intent to evade carries a 25% penalty.
Criminal exposure runs parallel to the civil penalties. A general violation of the sales and use tax law is a misdemeanor punishable by a fine of $1,000 to $5,000, up to a year in county jail, or both.19California Legislative Information. California Code RTC 7153 – Violations When unreported tax exceeds $25,000 in any 12-month period and the violation was intentional, the charge escalates to a felony carrying a fine of $5,000 to $20,000 and a prison sentence of 16 months to three years.20California Department of Tax and Fee Administration. California Revenue and Taxation Code 7153.5 – Violations Once a determination becomes final, the CDTFA can also place liens on business property and levy bank accounts, which is why the 30-day appeal window matters as much as it does.