California Sales Tax on Software and Digital Products California: Sales Tax Handbook

California:

Are Software and Digital Products subject to sales tax?

While California's sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. This page describes the taxability of software and digital products in California, including canned software - delivered on tangible media, canned software - downloaded, custom software - delivered on tangible media, custom software - downloaded, customization of canned software and digital products. To learn more, see a full list of taxable and tax-exempt items in California.


Canned Software - Delivered on Tangible Media
TAXABLE
Sales of canned software - delivered on tangible media are subject to sales tax in California.

Canned Software - Downloaded
EXEMPT
In the state of California, any prewritten program or programs which are transferred by any sort of remote telecommunications are considered to be exempt, so long as the buyer does not obtain possession of any sort of tangible personal property in the transaction.

Custom Software - Delivered on Tangible Media
EXEMPT
Sales of custom software - delivered on tangible media are exempt from the sales tax in California.

Custom Software - Downloaded
EXEMPT
Sales of custom software - downloaded are exempt from the sales tax in California.

Customization of Canned Software
TAXABLE
In the state of California, any separately stated charges which were incurred for modifications made to any canned software which was customized specifically for a certain customer are considered to be exempt, although only to extent of the modification.

Digital Products
EXEMPT
Sales of digital products are exempt from the sales tax in California.



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Source: http://www.salestaxhandbook.com/california/sales-tax-taxability/software-and-digital-products