Local and District Taxes
"Local Tax" is the general term for sales and use taxes imposed under the Bradley-Burns Uniform Sales and Use Tax Law. The basic statewide sales and use tax rate is 7.25% and is divided as follows:
- 6.00% State
- 1.00% Local Jurisdiction (City or county of place of sale or use)
- 0.25% Local Transportation Fund (County of place of sale or use)
"District Taxes" are imposed locally under the Transactions and Use Tax Law. The tax rate in your area may be higher than 7.25% depending on the district taxes that apply there.
The information on this page focuses primarily on Local Tax. Additional tax rate and District Tax information is available at our Customer Service Center at 1-800-400-7115.Open All Close All
Local Tax Allocation rules and procedures may vary depending on the business operations or type of goods sold. The following schedules and additional information should be helpful:
Local Tax Allocation Schedules and Instructions
If you represent a city, county, city and county or special tax district, the following will help you understand the local tax allocation process. Additional information is available below. Procedures for jurisdiction review of CDTFA records and CDTFA review of local and district tax reallocation petitions are available in Compliance Policy and Procedures Manual Chapter 9, Miscellaneous.
- Local Tax Statement of Distributions
- Notification Threshold List
- Allocation Calendar
- Quarterly Distribution Summary for Local and Add on Tax
Additional historical information is available (Excel files).
- CDTFA 549-L, Claimed Incorrect Distribution of Local Tax, Long Form
- CDTFA 549-S, Claimed Incorrect Distribution of Local Tax, Short Form
- CDTFA-555-LJ, Application for Payment by EFT
Guidance for Prospective Special Taxing Jurisdictions
What assistance can the California Department of Tax and Fee Administration (CDTFA) provide jurisdictions considering a new or extended transactions and use tax (district tax)?
The CDTFA's Local Revenue Allocation Unit (LRAU) can:
- Answer questions and assist districts in the process.
- Provide sample ordinances for a city, county, or special purpose entity (including a Transportation Authority).
- Review the proposed ordinances from the jurisdictions prior to their approval by the local governing legislative bodies to ensure that all the statutory requirements have been met.
Please contact us at 916-324-3000 for assistance or to obtain sample ordinances.
A county or a city can impose a district tax for general or specific purposes. These can be imposed either directly or through a special purpose entity. A county can also create a transportation authority to impose district taxes.
Additional information is available in sections 7285 through 7290 of the Revenue and Taxation Code. Information on transportation authorities is available in the Public Utilities Code (PUC), starting with section 24501. The CDTFA staff can provide assistance at 916-324-3000.
Yes. Current law only provides for an entire county (which includes incorporated and unincorporated territory), unincorporated area of the county or an incorporated city. Refer to Revenue and Taxation code sections 7285 and 7285.5 for laws applicable to counties and sections 7285.9 and 7285.91 for cities.
|County||General Purpose tax||2/3 vote of Board of Supervisors and majority of voters||7285|
|Specific Purpose tax (expenditure plan required)||2/3 vote of Board of Supervisors and 2/3 majority of voters||7285.5|
|City||General Purpose tax||2/3 vote of City Council and majority of voters||7285.9|
|Specific Purpose tax (expenditure plan required)||2/3 vote of City Council and 2/3 majority of voters||7285.91|
|County Authority||Transportation Authority||2/3 vote of Board of Supervisors and 2/3 majority of voters||PUC Divisions 10-25|
Special jurisdictions can also be created when authorized by special and specific legislation.
The combined rate of all district taxes imposed in any county shall not exceed 2%. Generally, tax rates may be imposed at a minimum rate of 0.125% and in 0.125% increments up to the 2% cap in a county. Special legislation may vary this format.
The following is an example of how the 2% cap applies. There are three district taxes within the county of San Bernardino (San Bernardino County, City of Montclair and City of San Bernardino)
|Current Rate||Available Rate to any city|
|(A)||031 – San Bernardino County (SBER)||0.50%||+||1.50%||=||2% cap|
|107 – City of Montclair (MTGR)||0.25%|
|148 – City of San Bernardino (SBRN)||0.25%|
|Available Rate to county|
|(B)||107 – City of Montclair (MTGR)||0.75%||+||1.25%||=||2% cap|
|148 – City of San Bernardino (SBRN)||0.75%||+||1.25%|
- Any incorporated city within the county of San Bernardino may impose a tax up to 1.50%.
- However, the county of San Bernardino is limited to an additional tax up to 1.25%.
NOTE: Any tax increase by the county would raise the tax rate in all the cities within that county.
"Operative Date" means the first day of the first calendar quarter commencing more than 110 days after the adoption of the ordinance by the voters.
For example, a tax approved by the voters on November 4, 2014, would have an operative date of April 1, 2015, where retailers engaged in business in the district would be required to collect the tax. In this case, April 1st is the first day of the calendar quarter more than 110 days after the election.
Can a jurisdiction put a district tax measure on the ballot by means other than by approval from the City Council or Board of Supervisors?
No. As previously stated in question #4, the Revenue and Taxation Code sets forth the procedural requirements by which a jurisdiction may levy a district tax.
If a district tax measure is placed on a ballot by any other process and is approved by the voters, the CDTFA cannot enforce the tax nor administer the funds.
Yes, if all the provisions of Elections Code sections 4000-4004 are met. Currently, a jurisdiction with less than 5,000 registered voters as last reported to the Secretary of State can conduct a mail-in election. See Elections Code section 1500 for mail election dates.
Yes. Under Revenue and Taxation Code section 7272, the CDTFA will bill a new special taxing jurisdiction for preparatory charges to administer the new district tax based on actual costs after the tax has been approved by the voters. As a result, we are unable to provide the specific costs until all of the charges have been submitted by the various CDTFA units and other state agencies. Actual charges to be billed include updating returns, programming for data processing, developing and adopting regulations, developing procedures, updating publications, notifying taxpayers, and other necessary costs which include the CDTFA's direct and indirect costs as specified under section 11256 of the Government Code.
The statutory maximum amount of preparatory costs shall not exceed $175,000.
Ongoing costs are calculated by a costing model which uses various workload factors.
For questions about specific jurisdictions or estimates, contact the CDTFA's Budget Section at 916-445-3811.
Representatives from the jurisdiction should contact us immediately. We will review the election results to ensure it meets statutory requirements. Notification by the jurisdiction as early as possible after the election will insure a timely implementation of the new district tax.
We will email two contracts that must be signed and returned to us by the jurisdiction for approval prior to the operative date of the tax. The contracts include:
- Agreement for preparation to administer and operate the tax, and
- Agreement for State administration of the tax
The jurisdiction must return the following:
- Five original preparation to administer contracts signed by an authorized official,
- Five original on-going administration contracts signed by an authorized official,
- Five certified ordinances,
- Five certified resolutions authorizing the official to sign the contracts,
- One certified copy of the Election Results, and
- Mailing address form for legal, finance and warrant correspondence.
When the executed contracts and other documents are received by us, an acknowledgement letter is issued by the Executive Director or designee of the California Department of Tax and Fee Administration and the contracts are forwarded to the Department of General Services (DGS) for final approval.
Once the contracts are approved by DGS, an approved original packet is returned to the jurisdiction for their records. The jurisdiction will be given the opportunity to adopt a resolution authorizing city/county officials to examine district tax records and to submit an agreement (CDTFA-555-LJ EFT Authorization Agreement) authorizing payment by Electronic Funds Transfer.
Please see publication 44, Tax Tips for District Taxes and publication 105, District Taxes and Delivered Sales for a full discussion and examples. In general, the district tax follows the merchandise. The tax is distributed to the district where goods are delivered and presumably used. However, there is an exception for sales or leases of vehicles, vessels and aircraft. Generally, the district tax for these sales is distributed to the district based on the address where the vehicle, vessel, or aircraft is registered.
Please see publication 28, Tax Information for City and County Officials for more information. There is no direct correlation between local sales and use tax and district taxes. In general, local sales tax is allocated to the retailer’s place of business in California where the sale occurs even though the property may never be at the place of business. If a retailer has multiple locations in California, local sales tax is allocated to the place where the principal negotiations are conducted, whether or not the property sold is ever in the jurisdiction where the retailer's place of business is located. Local use tax is allocated to the place where merchandise is first functionally used, generally through countywide pools.
As stated previously in question #12, the district tax is distributed to the district where goods are delivered or presumably used. In some cases, a retailer may allocate local tax but report no district tax to a jurisdiction if the merchandise was delivered to a location outside of the district where it was sold. On the other hand, if the merchandise is delivered into a district, a retailer may report district tax and not allocate any local tax to a jurisdiction.
Yes. Cities wishing to impose a district tax are strongly urged to establish and maintain a current street listing on their websites for use by retailers. Many cities have boundary lines that are difficult for a taxpayer to identify in order to collect a district tax. Some retailers have resorted to using zip codes which do not observe city boundary lines. This results in customers who live outside of the city boundaries but within the city's zip code to be overcharged by the retailers.
Comments or suggesting about this information can be directed to Local Revenue Allocation Unit at 916-324-3000.
Special Allocation Procedures Overview
- Sales and Purchases of $500,000 or More Subject to Use Tax
In general terms, an interstate sale is a sale in which the goods are delivered from out-of-state inventory directly to the California consumer by common carrier with title passing out of state or a sale that is negotiated instate with shipment of goods to an out-of-state location with title passing out-of-state. In either case, the sale is not subject to sales tax since the sale occurs outside California. Generally, however, interstate sales made by out-of-state retailers to California consumers are subject to use tax unless otherwise exempt. The local use tax on such interstate sales into California is usually reported on Form CDFTA-531 (Schedule B) opposite the county to which the goods are shipped.
Special Reporting Procedure:
Out-of-state retailers who are engaged in business in this state and collect use tax on single interstate sales of $500,000 or more, must report the local tax on the transaction on Form BOE-531F (Schedule F) to the specific jurisdiction in which the first functional use of the property occurs. This generally is deemed to be the jurisdiction to which the goods are shipped. See Regulation 1802 (c) for details.
- Construction Contractors with Contracts Valued at $5,000,000 (or more)
Generally, construction contractors are required to report the local use tax on materials consumed and the local sales tax on fixtures furnished and installed opposite the county of the jobsite on Form CDTFA-531 (Schedule B) resulting in the indirect distribution of the tax through the countywide pools. Construction contractors who make over-the-counter retail sales of materials or fixtures are required to segregate such sales from their construction contracts and provide a detailed allocation by place of sale for direct distribution to the local jurisdiction.
Special Reporting Procedure:
In December of 1994, the Board adopted a resolution, allowing for the direct distribution of the local tax on materials consumed and fixtures furnished and installed to the local jurisdiction of the construction site for certain qualifying contracts. Under the resolution, a construction contractor who enters into a construction contract equal to or greater than $5,000,000 may elect to obtain a sub permit for the jobsite of the qualifying contract resulting in a direct allocation of tax to the jurisdiction in which the jobsite is located rather than an indirect allocation through the countywide pool. It is important to note that participation by contractors in this special procedure is strictly voluntary and limited to the installing contractor or subcontractor. See Compliance Policy and Procedures Manual, (CPPM) Chapter 2, "Registration," Section 260.020 - Contractors, for more information.
- Sales of Jet Fuel
Generally, if a retailer has more than one place of business in California that participates in the sale, the sale occurs at the place of business where the principal negotiations take place.
Special Reporting Procedure:
If both of the following conditions are met, the place of sale or purchase of jet fuel is the city, county or city and county where the fuel is delivered to the aircraft (wing-tip):
- The principal negotiations for the sale of jet fuel are conducted in this state, and,
- The retailer has more than one place of business in this state. Regulation 1802 provides specific details regarding the proper allocation of the sales tax on jet fuel.
- Long-term Leases of Motor Vehicles
Generally, the use tax derived from short-term leases of motor vehicles is reported to the location of the lessor's place of business, or in certain circumstances to the countywide pool where the vehicle is registered. Prior to 1996, the local use tax derived from long-term leases of motor vehicles was reported opposite the county of the registration address on Form CDTFA-531, Schedule B resulting in the indirect distribution of the tax through the countywide pools.
Special Reporting Procedures:
Special procedures involve long-term leases (greater than four months) of motor vehicles where the vehicles are either purchased from a California dealer or are leased by a California dealer-lessor. The allocation procedures for leases of these vehicles are outlined in the following table. Definitions of the terms "motor vehicle", "leasing company" and "mobile transportation equipment (MTE)" as used for these special procedures are footnotes to the table. See Regulation 1803.5 for details.
Type of Lessor Type of Transaction 1% Local Tax Allocation to: Leases Exceeding Four Months Leases of Four Months or Less California New Motor Vehicle Dealer/Lessor Lease of motor vehicle* Dealer/Lessor's sales location Dealer/Lessor's sales location California Leasing Company (as defined)** Lessor's place of business Lessor's place of business California Lessor (other than a new motor vehicle dealer or leasing company as defined)**: Lease of a motor vehicle* purchased from a California new motor vehicle dealer Dealer/Lessor's place of business (Schedule F) Lease of a motor vehicle* purchased from someone other than a California new motor vehicle dealer Lessee's place of registration (Schedule B) Lease of MTE*** purchased from a California new motor vehicle dealer (except new pick up trucks rated less than one ton) Lessor's place of business Out-of-State Lessor: Lease of a motor vehicle* purchased from a California new motor vehicle dealer California Dealer's place of business (Schedule F) Lessee's place of registration (Schedule B) Lease of a motor vehicle* and MTE*** purchased from someone other than a California vehicle dealer Lessee's place of registration (Schedule B)
* Motor Vehicle means any (new or used) self-propelled passenger vehicle (other than a house car) or pick up truck rated less than one ton.
** Leasing company means a motor vehicle dealer/lessor that originates lease contracts and does not sell or assign the lease contracts and that has annual motor vehicle lease receipts of $15 million or more annually for each business location.
*** MTE (Mobile Transportation Equipment) means equipment used for transporting persons or property for substantial distances such as railroad cars, buses, trucks and truck trailers. For a complete listing of MTE, please see Regulation 1661.
Generally, the place of sale by an auctioneer is the place at which the auction is held. Auctioneers who conduct all of their auctions at their permanent place of business allocate their local tax to the corresponding local jurisdiction. For auction sales held at a location other than the auctioneer's regular place of business, the local tax is reported on Schedule B to the countywide pool in which the auction is held.
For additional information about how your business activities determine the schedule you will use to report local tax, see Exhibit 5 of Compliance Policy and Procedures Manual Chapter 5, Returns.
Frequently Used Local Tax Regulations
- Regulation 1802, Place of Sale
- Regulation 1803, Application of Tax
- Regulation 1806, Construction Contractors
- Regulation 1807, Process for Reviewing Local Tax Reallocation Inquiries