California Use Tax Information

Understanding California Use Tax

What Is Use Tax?

Use tax is a tax on purchases made from out-of-state or online sellers when sales tax has not been collected. It ensures that California consumers contribute fairly to state and local programs, just like purchases made within the state.

When Does Use Tax Apply?

You may owe California use tax if:

• You buy merchandise from out-of-state retailers (e.g., online stores, mail-order catalogs, or TV shopping networks) and no sales tax is collected.

• You withdraw taxable goods from your business’s resale inventory for personal or business use.

• You purchase vehicles, vessels, mobile homes, or aircraft from sellers without a California seller’s permit.

How to Pay Use Tax

• Retailer Collection – If the seller is required to collect California tax, they will include it in your purchase.

• Direct Payment – If tax was not collected, you must report and pay use tax to the California Board of Equalization (BOE).

• Income Tax Return – You can report and pay use tax directly on your California income tax return instead of filing a separate return.

Why Does Use Tax Exist?

Use tax has been in effect since July 1, 1935, ensuring:

• Fair competition – Protecting California businesses from being undercut by out-of-state sellers.

• Equitable contributions – Ensuring all residents support state and local services, regardless of where they shop.

For more details or to file your use tax return, visit the California Board of Equalization (BOE) website.