California – Sales Tax Rate Increase Takes Effect January 2013

SALT Report 1910 – Due to the passage of Proposition 30, the base sales and use tax rate in California has been increased by 0.25%. The higher tax rate will take effect on January 1, 2013, and runs through December 31, 2016.

The increased base sales and use tax rate is in addition to other voter-approved district taxes. Therefore, sales or purchases made in special tax districts will be subject to the increased statewide rate of 7.50%, plus the applicable district tax rate.

Motor Vehicle Fuel and Diesel Fuel

The sales and use tax rate increase does not apply to sales of gasoline, which is currently set at 2.25% plus applicable district taxes.

However, the rate increase does apply to sales of diesel fuel.  Effective January, 1, 2013, the sales and use tax rate for sales of diesel fuel will increase to 9.67% plus applicable district taxes. This increased rate will be in effect until June 30, 2013.

The sales tax prepayment rate for motor vehicle fuel and diesel fuel has not been affected.

Fixed Price Contracts

The 0.25% rate increase also applies to taxable sales and purchases made pursuant to a fixed-priced contract or fixed-price lease agreement. This includes contracts that were entered into prior to January 1, 2013. The increased rate will replace the rate that was in effect at the time the parties entered into the fixed-price contract or fixed-price lease agreement.

For Further Information:

California State Board of Equalization – Sales and Use Tax Rate Increase