California use tax is what you owe when you buy a taxable item from a seller that didn’t collect California sales tax and then use, store, or consume that item in the state. The rate matches the sales tax rate where you use the property, starting at a statewide 7.25% and climbing as high as 11.25% once local district taxes are added.1California Department of Tax and Fee Administration. California City and County Sales and Use Tax Rates Most individuals report it once a year on their California income tax return.
When You Actually Owe Use Tax
The tax applies to tangible personal property purchased from any retailer for use in California, under Revenue and Taxation Code Section 6201.2California Legislative Information. California Code RTC Division 2 Part 1 Chapter 3 Article 1 Section 6201 Furniture, electronics, clothing, jewelry, appliances, building materials: if you would have paid sales tax buying it at a California store, you owe use tax when you bring it in without paying that tax. Whether the item arrived by mail, courier, or in your own car doesn’t change the answer.
California’s marketplace facilitator law, effective October 1, 2019, took a large chunk of everyday online shopping out of this picture. Under Revenue and Taxation Code Section 6042, platforms like Amazon, eBay, Etsy, and Walmart’s online marketplace are treated as the retailer on every sale made through them and must collect California tax at checkout.3California Department of Tax and Fee Administration. Sales and Use Tax Law Section 6042 If California tax appears on your receipt, you owe nothing more.
Use tax still applies when no California tax was collected. Common examples:
- Buying directly from a small out-of-state retailer’s own website that doesn’t collect California tax.
- Picking up art, jewelry, or electronics while traveling in another state and bringing them home.
- Buying a used item from a private seller in another state.
- Ordering by catalog or phone from a seller outside California’s collection network.
Vehicles, vessels, and aircraft bought out of state sit in a separate track. California generally collects use tax on those through the DMV at registration, so you don’t put them on your income tax return or a CDTFA filing.
What’s Exempt
The same exemptions that apply to sales tax apply to use tax. For a typical consumer, three matter most:
- Most groceries. Food for human consumption is exempt under Revenue and Taxation Code Section 6359, covering produce, meat, dairy, cereal, and bottled water. Prepared meals, restaurant food, hot food sold for immediate consumption, and vending machine food are not exempt. Alcohol and carbonated beverages are specifically excluded, and dietary supplements sold as pills or capsules are taxable.4California Legislative Information. California Code RTC Division 2 Part 1 Chapter 4 Article 1 Section 6359
- Prescription medicine. Medicines prescribed by a licensed physician, dentist, or podiatrist and dispensed by a pharmacist are exempt under Section 6369.5California Department of Tax and Fee Administration. Sales and Use Tax Law Section 6369
- Items bought for resale. If you buy inventory intending to resell it before making personal use of it, a resale certificate lets you purchase tax-free. If you later use the inventory yourself, you owe use tax at that point.6Justia Law. California Code RTC Article 3 Presumptions and Resale Certificates
Credit for Tax Paid to Another State
If you already paid sales or use tax to another state on the same item, Revenue and Taxation Code Section 6406 gives you a dollar-for-dollar credit against your California use tax, capped at what California would have charged.7California Legislative Information. California Code RTC Division 2 Part 1 Chapter 4 Article 3 Section 6406 Buy a laptop in Oregon, where there’s no sales tax, and you get no credit and owe the full California rate. Buy the same laptop in a state that charged 5% when your California rate would be 9.5%, and you owe the 4.5% difference.
Rates and How to Calculate What You Owe
The statewide base rate is 7.25%. Local district taxes of 0.10% to 2.00% or more push combined rates as high as 11.25% depending on the address. The rate that applies is the one for where you use or store the item, not where you bought it. You can look up your exact rate by address on the CDTFA website.
The Lookup Table for Small Personal Purchases
If all your untaxed purchases for the year were personal items costing less than $1,000 each, you can skip receipt-by-receipt math and use the CDTFA’s use tax lookup table. It gives a flat estimated amount based on your adjusted gross income:8California Department of Tax and Fee Administration. California Use Tax Table
- Under $10,000 AGI: $0
- $10,000 to $49,999: $1 to $4
- $50,000 to $99,999: $5 to $9
- $100,000 to $149,999: $10 to $12
- $150,000 to $199,999: $15 to $17
- Over $199,999: multiply AGI by 0.009%
The table doesn’t cover business purchases or any single item costing $1,000 or more. For those, calculate the exact tax.
The Exact Calculation
Multiply the total purchase price, including any shipping or handling that was part of the sale, by the combined rate at the location where you use or store the item. On a $2,000 piece of equipment at a 9.50% combined rate, that’s $190, minus any credit for tax already paid elsewhere.
How to Report and Pay
Most individuals report use tax on their annual California income tax return (Form 540) using the dedicated use tax line. You enter either the amount from the lookup table or your actual calculation. The tax gets added to your overall liability, reducing your refund or increasing what you owe. Filing is due April 15.
There’s a separate track for businesses and other filers that don’t hold a seller’s permit but rack up significant untaxed purchases. Through December 31, 2028, a “qualified purchaser” is anyone making more than $10,000 in purchases subject to use tax per calendar year, and they must register with the CDTFA and file annually on Form CDTFA-401-E.9California Department of Tax and Fee Administration. California Use Tax Basics Publication 110 – Paying Use Tax Vehicles, vessels, and aircraft don’t count toward that threshold because they’re taxed at DMV registration.
Penalties, Interest, and How Far Back the State Can Look
Under Revenue and Taxation Code Section 6591, paying use tax late triggers a 10% penalty on the unpaid amount, and failing to file a required return carries its own 10% penalty on the tax due. The combined penalty for a single return is capped at 10%, so those don’t stack.10California Legislative Information. California Code RTC Division 2 Part 1 Chapter 5 Article 6 Section 6591
Interest accrues from the original due date until you pay. The CDTFA rate for 2026 is 10% per year, recalculated every six months based on the IRS rate plus three percentage points.11California Department of Tax and Fee Administration. Interest Rates
The CDTFA generally has three years after you file to assess additional use tax. If you never filed at all, that stretches to eight years, and neither limit applies where there’s fraud or intent to evade.12California Department of Tax and Fee Administration. Sales and Use Tax Law Section 6487 Skipping a filing doesn’t delay the problem; it gives the state longer to come after you.
Deliberate evasion is a separate matter. Willful failure to file or pay can be charged as a misdemeanor with fines up to $5,000 and up to a year in jail. If the unpaid tax exceeds $25,000 within a 12-month period and there’s intent to evade, it becomes a felony punishable by fines up to $20,000 and 16 months to three years in state prison.