# California’s New SaaS Use Tax

Canonical: https://trykintsugi.com/blog/californias-new-saas-use-tax
Published: 2026-10-15

Starting January 1, 2027, California will charge a use tax on SaaS under SB 122. Register early and automate sales tax collection with Kintsugi.

Under current law, SaaS revenue in California generally isn't subject to sales tax. SB 122 changes that as of January 1, 2027. If you have nexus in California, whether through crossing the sales threshold or having physical presence, that dormant nexus will become an active liability.

## Why October is the right time to register

For clients who've already established nexus but haven't needed to register because their taxable sales were zero, we recommend registering with the [California Department of Tax and Fee Administration](https://cdtfa.ca.gov/services/registration.htm) (CDTFA) in October.

CDTFA registrations typically take three to four weeks to process. Factor in the slowdown around the holidays, and an October start builds in enough buffer to make sure registration is complete well before the January 1 deadline. Waiting until December to start is a gamble on processing times you don't control.

## If you've deregistered before: register fresh, don't reactivate

Some clients previously held a CDTFA permit and successfully deregistered when their situation changed. For these clients, the instinct might be to simply reactivate the old permit. We're advising against that. Reactivating an old permit risks pulling in all the periods that were missed while the permit was inactive, potentially creating exposure and complication that a fresh registration avoids.

## What happens after registration

Once you’re registered, you’ll need to start collecting California tax on your SaaS sales starting January 1, 2027, and from that point forward it's business as usual, just with a new sales tax to track.

## Three things to have in place well ahead of January 1, 2027:

1. Start CDTFA registration in October to account for processing time and seasonal delays.
2. Register fresh – don’t reactivate your CDTFA account.
3. Treat post-registration onboarding as standard: collecting CA tax on SaaS sales follows the same process as any other tax-collection setup.

The rule change itself is significant, but the compliance path is manageable if you start early.

Ready to automate the complicated parts of sales tax compliance? [Book a demo with our team](/kintsugi-demo).