California Sales Tax on SaaS

Senate Bill 122, signed June 29, 2026, extends California sales and use tax to digital products: prewritten software on media, delivered electronically, or accessed remotely, including SaaS, operative January 1, 2027. Custom software stays outside, along with seven excluded categories. Sourcing runs a hierarchy ending at the purchaser's California address, and a purchaser whose digital purchases from a single retailer exceed $5 million annually self-assesses under a direct payment permit. Exemption certificates carry conditions, and emergency regulations are coming. Sellers and buyers of remote-access software with California customers have until January 1 to source, price, contract, and paper the change.

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