California Use Tax, Good for You. Good for California

Overview

California's sales tax generally applies to the sale of merchandise, including vehicles, in the state. California's use tax applies to the use, storage, or other consumption of those same kinds of items in the state.

Generally, if sales tax would apply when you buy physical merchandise in California, use tax applies when you make a similar purchase without tax from a business located outside the state.

For these purchases, the buyer is required to pay use tax separately.

If you made purchases for a business use and may owe tax, click on the For Business Use tab for more information and payment options.

If you made purchases for your personal use and may owe tax, click on the For Personal Use tab for more information and payment options. Watch this video for more information about use tax:

Use Tax
Use Tax – Foreign Travel
Use Tax – Holiday Shopping Online Gift Buying
Did You Know?

Did You Know?

Many smart shoppers can find bargains online, but don't realize they can incur a tax bill in the process. California law requires tax on in-state purchases, and also requires tax on items purchased out-of-state for use in California.

How to Pay Use Tax

If you have a California seller's permit, you must pay the use tax due on business related purchases with your sales and use tax return in the period when you first used, stored, or consumed the item in California. Report the amount of your purchase under “Purchases subject to use tax,” (line 2) on the return.

If you are a “qualified purchaser,” you must pay your use tax due by filing your return for the previous calendar year by April 15.

A “qualified purchaser” must register with us and annually report and pay use tax directly to us, as required by Revenue and Taxation Code (R&TC) section 6225. If you are not required to hold a seller’s permit and are not currently registered with us for use tax purposes, you may be required to register as a “qualified purchaser.”

A "qualified purchaser" means a person that meets all of the following conditions:

  • Prior to January 1, 2024, a “qualified purchaser” was defined as a person that received at least $100,000 in gross receipts from their business operations per calendar year and was not otherwise required to be registered with us.
  • Beginning January 1, 2024, the definition of a “qualified purchaser” was revised* to eliminate the requirement that the person receives at least $100,000 in gross receipts per calendar year from business operations. It instead requires that the person makes more than $10,000 in purchases subject to use tax (excluding vehicles, vessels, or aircraft) per calendar year if the use tax imposed on those purchases has not otherwise been paid to a retailer engaged in business in this state or authorized to collect the tax. This change is effective from January 1, 2024, through December 31, 2028.
  • On January 1, 2029, that definition of a “qualified purchaser” will revert to a person receiving at least $100,000 in gross receipts per calendar year from business operations. Gross receipts are the total of all receipts from both in-state and out-of-state business operations.
  • The person is not required to hold a seller's permit or certificate of registration for use tax as described in R&TC section 6226.
  • The person is not a holder of a use tax direct payment permit as described in R&TC section 7051.3.
  • The person is not otherwise registered with the us to report use tax.

*See Assembly Bill 1097 (Stats. 2023, ch. 355)

You can register on our website at www.cdtfa.ca.gov by selecting Register Online under Register for a Permit and then selecting Register a New Business Activity. Once you have registered, you may pay any use tax due after filing your return. You can also register to report use tax in person at any of our offices.

For more information, see publication 126, Mandatory Use Tax Registration for Service Enterprises.

If you are not required to have a seller's permit or a use tax account you must pay use tax in one of the following ways.

  •  The easiest way to report and pay the use tax is on your California state income tax return. Follow the instructions included with your income tax return. Complete the worksheet included in those instructions to determine the amount of your use tax liability. As part of reporting use tax on the state income tax return, you may also choose to use a Use Tax Lookup Table.

    OR
  • Pay use tax directly to us by using our Online Services.

Sales Tax vs. Use Tax: What’s the Difference?

Tax collected by the retailer here in California is called sales tax, and the retailer is responsible for reporting and paying the tax to the state. When an out-of-state or online retailer doesn't collect the tax for an item delivered to California, the purchaser may owe "use tax," which is simply a tax on the use, storage, or consumption of personal property in California.

Exempt Items

Items that are exempt from sales tax are exempt from use tax as well. Use tax liabilities are often created by internet or mail order purchases with out-of-state retailers not required to collect the tax. Be sure to review your receipts from Internet and other out-of-state purchases to determine if tax was charged.

Why Is There a Use Tax?

The use tax, which was created in July 1935, is a companion to California's sales tax that is designed to level the playing field between in-state retailers who are required to collect tax, and some out-of-state retailers who are not. Use tax, just like sales tax, goes to fund state and local services throughout California.

What Kinds of Purchases Are Taxable?

For questions on whether a purchase is taxable read the California Use Tax Information, or call our Customer Service Center at 1-800-400-7115 (CRS 711).

How Do I Find My Local Tax Rate?

You can look up your local sales and use tax rate.

Vehicles, Vessels, and Aircraft

If you have questions on how to report and pay use tax on the purchase of vehicles, vessels, and aircraft, see our Tax Guide for Purchasers of Vehicles, Vessels, & Aircraft or refer to Publication 79, Documented Vessels and California Tax, or Publication 79-A, Aircraft and California Tax. The use tax due on these purchases cannot be reported on your California state income tax return.

Cigarette and Tobacco Products

If you are registered with the California Department of Tax and Fee Administration as a cigarette and/or tobacco products consumer, your purchases of cigarette and tobacco products may not be reported on your sales and use tax return. If you need additional information, contact our Customer Service Center at 1-800-400-7115 (CRS 711).

Foreign Purchases

Generally, use tax also applies to foreign purchases of tangible personal property brought into California for storage, use, or other consumption. More information about items brought into California through U. S. Customs is available online.

For Personal Use

Generally, if the item would have been taxable if purchased from a California retailer, it is subject to use tax.

What items are subject to use tax

Generally, if the item would have been taxable if purchased from a California retailer, it is subject to use tax.

For example, purchases of clothing, appliances, toys, books, furniture, or CDs would be subject to use tax. Purchases not subject to use tax include food for human consumption such as peanut butter and chocolate. Electronically downloaded software, music, and games are not subject to tax if no tangible storage media is obtained. See Foreign Purchases for item(s) purchased in a foreign country and personally carried into this state.

How do I calculate what I owe?

Use the sales and use tax rate applicable to the place in California where the item is used, stored, or otherwise consumed and apply it to the total purchase price. For personal purchases, this is usually your home address. Include handling charges.

Example

Question: I bought a stereo online for $200, including shipping, and had it sent to my home. But, I was not charged tax during the purchase. How much use tax do I owe?
Answer: Find your local tax rate at the time of the purchase on this webpage. If your local rate is 8.0%, then you would owe $16 in use tax ($200 × .08 = $16).

Shipping charges are generally not taxable when items are shipped by common carrier or US Mail, the invoice separately states charges for shipping, and the charge is not higher than the actual cost for shipping.

How do I pay the tax due?1

Use tax is owed by April 15th the year after you make a purchase for which California tax was not charged. You can either pay once a year when you file your state income taxes, or make payments directly to the CDTFA after each purchase.

Option 1: Pay on Your State Income Tax Forms

On your California state income taxes, using forms 540 or 540 2EZ, simply put in the amount owed on the appropriate line for the entire year1.

You can save all of your receipts and report the exact amount you owe or follow the instructions included with your income tax return to use the Use Tax Lookup Table for nonbusiness items with a purchase price under $1,000.
Learn more about the lookup table.

Option 2: Make Payments Directly to the California Department of Tax and Fee Administration

You may pay use tax on a one-time purchase, directly to us. Follow log-in and step-by-step reporting and payment instructions.

If you are late in paying your use tax, you may be eligible to pay a liability from a previous year and avoid late payment penalties under our In-State Voluntary Disclosure Program.

1 Purchases of vehicles, vessels, aircraft, and mobile homes, as well as purchases of cigarettes and tobacco products cannot be reported on your California state income tax return. If you hold a California consumer use tax account, you are required to report purchases subject to use tax directly to us and may not report the tax on your income tax return.

For More Information

If you have questions or would like additional information, you may call our Customer Service Center at 1-800-400-7115, or your local CDTFA office.

For Business Use

In general, a business must pay California use tax on purchases from a retailer outside California (for example, by telephone, over the Internet, by mail, or in person) if both of the following apply:

  • The seller does not collect California sales or use tax. Check the purchase invoice or receipt to verify if the tax was added by the seller.
  • You use, give away, store, or consume the item in California. Report purchases of items that would have been taxable if purchased from a California retailer.

For example, you would include purchases of equipment, supplies, and books. Examples of purchases not subject to tax include food for human consumption such as peanut butter and chocolate. Also, electronically downloaded software, music, and games are not subject to tax if no tangible storage media is obtained.

How do I calculate what I owe?

Use the sales and use tax rate applicable to the place in California where the item is used, stored, or otherwise consumed and apply it to the total purchase price. Include handling charges.

  1. Example
  2. Question: I bought a case of printer paper online for $75, including shipping, for use in my business. I had it sent to my business, and was not charged tax during the purchase. How much use tax does the business owe?
  3. Answer: Find your business' local tax rate at the time of the purchase on this webpage. If your local rate is 8.0%, then you would owe $6 in use tax ($75 x .08 = $6).

Shipping charges are generally not taxable when items are shipped by common carrier or US Mail, the invoice separately states charges for shipping, and the charge is not higher than the actual cost for shipping.

How does my trade or business pay the tax due?1

Your payment method may vary depending on the type of business.
The following businesses are required to report purchases subject to use tax directly to us:

  • Businesses that have a California seller’s permit.
  • Businesses, known as “qualified purchasers,” not required to hold a California seller's permit, but:
    • Prior to January 1, 2024, receive at least $100,000 in gross receipts from business operations per calendar year.
    • From January 1, 2024, through December 31, 2028, make more than $10,000 in purchases subject to use tax (excluding vehicles, vessels, or aircraft) per calendar year if the use tax imposed on those purchases has not otherwise been paid to a retailer authorized to collect the tax.
    • Beginning January 1, 2029, receive at least $100,000 in gross receipts from business operations per calendar year.
    Please see our guide on Qualified Purchasers for more information.
  • Businesses that have a California consumer use tax account.

Businesses that don't fall into one of the above categories have two options:

  1. Pay use tax on state income tax forms - The business can complete the worksheet included in the instructions to the income tax return form applicable to its entity to determine the amount owed
  2. You may pay use tax on one-time purchase. Follow the log-in and step-by-step reporting and payment instructions.

1 Purchases of vehicles, vessels, aircraft, and mobile homes, as well as purchases of cigarettes and tobacco products cannot be reported on your California state income tax return. Please call our taxpayer information section at 1-800-400-7115 for more information.

When is the tax due?

April 15th following the calendar year in which you made your purchase, if you are eligible to pay use tax on your California income tax return.

Otherwise, report and pay use tax directly to the California Department of Tax and Fee Administration at the time you are instructed to file your returns.

If you are late in paying your use tax, you may be eligible to pay a liability from a previous year and avoid late payment penalties under our In-State Voluntary Disclosure Program.

For More Information

If you have questions or would like additional information, you may call our Customer Service Center at 1-800-400-7115, or your local CDTFA office.

Foreign Purchases

Generally, use tax applies to purchases of tangible personal property made outside the United States and brought into, or shipped into California for storage, use, or other consumption. Examples of items purchased by individuals that are brought or shipped into California for use here include artwork, antiques, furniture, jewelry, and clothing. However, there are certain exceptions (see below).

Purchases not subject to use tax

In general, the following purchases are not subject to use tax:

  • Hand carried items. The first $800 of goods that are purchased from a retailer in a foreign country by an individual and personally hand–carried into this state from the foreign country within any 30-day period is exempt from use tax. This exemption does not apply to goods sent or shipped to California.
  • Gifts you received while abroad. You should obtain and keep a signed letter from the giver describing the item and stating it was a gift, and not compensation. However, tax does apply to property which you purchased to give to another person as a gift, including a gift to a spouse.
  • Purchases for resale. If you operate a business here in California and are required to hold a seller's permit, items you purchase to resell in the regular course of your business are generally not subject to tax. However, your purchases of items for use in your business in California, for example equipment, consumable supplies or other tangible assets, are subject to use tax.
  • Purchases for use outside of California. Your purchase of property (other than vehicles, vessels, or aircraft) outside of California is generally not considered to have been purchased for use in California and use tax does not apply if the property is:
    • delivered outside of California,
    • first functionally used outside of California, and
    • used, stored, or both used and stored outside of California for more than 90 days from the date of purchase to the date of entry into California.*

    *This is exclusive of any time the property was being shipped or stored for shipment to California.

    However, in general, if you purchase property outside of California and first functionally use the property in California, your purchase is subject to use tax. "Functional use" means the use for which the property was designed. You should retain documentation to show that the property was purchased for use outside of California. For more information, see Regulation 1620, Interstate and Foreign Commerce.

Please note: different rules apply to purchases of vehicles, vessels or aircraft; see our Tax Guide for Purchasers of Vehicles, Vessels, & Aircraft.

For all purchases, you should retain documentation, such as receipts, invoices, shipping documents, etc., to support your claim that your purchase(s) brought or shipped to California is not subject to use tax.

Import fees, duty, foreign taxes, Value-Added Tax (VAT)

In general, you may not take a credit for sales tax paid to a foreign country against the California use tax you owe.

Federal import duties or taxes are imposed under United States Code, Title 19, section 1505(a) and have no bearing on the application of California sales or use tax. The fact that a certain purchase is exempt from federal duty does not exempt that item from California use tax. For example, purchases of antiques more than 100 years old are subject to California use tax even if the purchase was exempt from the import duties.

If your purchase is subject to California use tax, any amounts you paid as import fees, duty, or other miscellaneous charges at the time of entry into California are generally not includable in the measure of tax.

Please note: the Federal import duties are imposed on the importer of record. If the importer of record is a consignee and the consignee is the seller, import duties included in the price of the property sold are subject to sales and use tax. See Regulation 1617, Federal Taxes.

If you paid any Value-Added Tax (VAT) on your foreign purchase, those charges must be included as part of the purchase price subject to tax when you report and pay the use tax. You may not take a credit for VAT paid against the California use tax due.

Some international sellers are registered to collect California use tax. If you pay California use tax on your foreign purchase, you may take a credit against your California use tax liability. You must retain documentation (for example, receipt or invoice from seller) to show that the use tax was paid to a seller registered with California.

Calculating and reporting the use tax owed

To calculate and report the use tax owed, please see the For Personal Use or For Business Use tabs.

Resources

Annual Reported Use Tax Revenue
Source Registered with
CDTFA		 Period
Fiscal Year Ending (FYE)		 Use Tax Reported
(in millions)
Use Tax Reported by Registered California Consumers Yes FYE 06/30/2017 $177
Use Tax Reported by Registered Out-of-State Retailers Yes FYE 06/30/2017 $2,912
Use Tax Reported by Seller’s Permit Holders Yes FYE 06/30/2017 $1,401
Use Tax Assessed in Audits Yes FYE 06/30/2017 $129
Use Tax Reported on One-Time, Individual Use Tax Returns No FYE 06/30/2017 $16
Use Tax Reported on California Income Tax Returns No FYE 06/30/2017 $24
Use Tax Reported on Out-of-State Purchases of Vehicles, Vessels, and Aircraft No FYE 06/30/2017 $28
Use Tax Reported on Foreign Purchases No FYE 06/30/2017 $8
Use Tax Collected by DMV on Private Party Transactions No FYE 06/30/2017 $606
Use Tax Reported for Mobile Homes No FYE 06/30/2017 $2.8
Total Combined FYE 06/30/2017 $5,303.8

Updated 11/2017


Registration and Reporting Requirements & Instructions

Registration and Reporting Requirements

Even if you are an individual or unregistered service business, and are not required to be registered for any of the reasons below, you are still required to report use tax on all purchases made from out-of-state retailers in which California tax was not collected.

How to Report and Pay Use Tax

If you are not required to hold a seller's permit or use tax account (see below), the easiest way to pay use tax is to report it on your California Income Tax Return found at www.ftb.ca.gov. Follow the instructions included with your income tax return. Complete the worksheet included in those instructions to determine the amount of your use tax liability. However, you may choose to report and pay use tax directly to the California Department of Tax and Fee Administration (CDTFA). Simply use our online registration to report and pay the tax due.

Registration and Reporting Requirements

If you hold a California seller's permit, you must pay the use tax due on purchases you make from out-of-state retailers that were not otherwise taxed and taxable merchandise you withdraw from resale inventory for personal or business use.

How to Report and Pay Use Tax

You must report use tax under "Purchases Subject to Use Tax" (Line 2) of your sales and use tax return.

Registration and Reporting Requirements

Generally, you are considered a "qualified purchaser" and will be required to register with us and report and pay use tax due when the tax was not paid to a retailer required to collect the tax or to a retailer you reasonably believed was required to collect the tax, if you are a business not required to hold a California seller's permit and:

  • Prior to January 1, 2024, receive at least $100,000 in gross receipts from business operations per calendar year;
  • From January 1, 2024, to December 31, 2028, make more than $10,000 in purchases subject to use tax (excluding vehicles, vessels, or aircraft) per calendar year if the use tax imposed on those purchases has not otherwise been paid to a retailer authorized to collect the tax; or
  • Beginning January 1, 2029, receive at least $100,000 in gross receipts from business operations per calendar year.

Please see the FAQs for the Qualified Purchaser Program to determine if you are required to register. For more information, please see:

How to Report and Pay Use Tax

You must pay your use tax due by filing your annual use tax return for the previous calendar year by April 15. If the due date falls on a weekend or state holiday, then the due date is extended to the following business day.

Registration and Reporting Requirements

If you are a person or business that regularly incurs use tax liabilities, but are not required to hold a seller's permit and are not required to register for a use tax account as a qualified purchaser (see above), you should arrange to receive consumer use tax returns by applying for a consumer use tax account online using our online registration.

How to Report and Pay Use Tax

If you hold a consumer use tax account, you must report use tax on your use tax return. File online or use CDTFA 401-E, State, Local, And District Consumer Use Tax Return.

Registration and Reporting Requirements

If you purchase from a seller who does not hold a California seller's permit and did not pay tax on the purchase of a vehicle, vessel, aircraft, or mobile-home, you may be required to report use tax directly to the CDTFA. Please see our Tax Guide for Purchasers of Vehicles, Vessels, & Aircraft for more information on reporting use tax on a vehicle, vessel, or aircraft. Please see Regulation 1610.2, Mobile-homes and Commercial Coaches for more information on reporting use tax on mobile-homes.

How to Report and Pay Use Tax

Generally, use tax on private purchases of vehicles and undocumented vessels is paid to the Department of Motor Vehicles (DMV) at the time of registration.

You can register online to report and pay use tax on a vehicle, a vessel registered with DMV, a documented vessel registered with the U.S. Coast Guard, an aircraft, or a mobile-home.

Please have the following information available at the time of registration:

  • Name and address of both the purchaser and seller
  • Identification number of the property purchased such as the tail number, documentation number or serial number
  • Make, model and year of property
  • Date of Purchase
  • Total Purchase Price
  • Location where property will be used, stored or registered

For additional information about how to report and pay use tax, please see publication 79, Documented Vessels and California Tax, publication 79A, Aircraft and California Tax, or follow the instructions in Regulation 1610.2, Mobile-homes and Commercial Coaches.

Purchases of vehicles, vessels, aircraft, and mobile-homes are not to be reported on your California state income tax return. For additional information, please see our Tax Guide for Purchasers of Vehicles, Vessels, & Aircraft.

Registration and Reporting Requirements and How to Report and Pay Use Tax

If you purchase untaxed cigarette and/or tobacco products from an out-of-state retailer, you are required to log in at www.cdtfa.ca.gov to file a return to report your purchases and pay the unpaid excise and use taxes to us. You may not report and pay these taxes on your Sales and Use Tax return or on your California state income tax return.

For more information, please see our:

Registration and Reporting Requirements

The first $800 of tangible personal property that is purchased from a retailer in a foreign country by an individual and personally hand-carried into this state from the foreign country within any 30-day period is exempt from use tax. This exemption does not apply to property sent or shipped to this state. You are required to report use tax due on any purchases of foreign goods not meeting this exemption. Please see Foreign Purchases for additional information on reporting requirements for foreign purchases.

How to Report and Pay Use Tax

If you purchase foreign goods that do not qualify for any exclusion, you should report and pay use tax using the method based on your purchaser type as described above (individual, seller's permit holder, etc.) Please see Foreign Purchases for additional information on reporting requirements for foreign purchases.

Storage and Use Exclusion

Use Tax Table