California starts taxing SaaS on January 1
SaaS sold into California has been tax-free for decades. That ends in — days. Take our free assessment to see if you need to register, what it will cost, and your plan for day one.
100% free · 8 questions · 2 minutes · Results instantly
SOC 2 Type II4.6 G27,000+ companies
Is what you sell taxable?
Pick the closest match.Taxable from January 1, 2027
SaaS and other remotely accessed prewritten software are explicitly covered. Configuring your platform for one client doesn't make it custom software, and the CDTFA's draft rules treat AI features inside a prewritten platform and mandatory maintenance or license fees as taxable too.
Check my whole setupMost SaaS teams haven't noticed yet
The ones who do it in December will be waiting in the same CDTFA queue as everyone else.
Check your readiness now if:
Anyone works for you from California
One remote employee or contractor creates nexus from your first dollar of sales.
You closed a $0 permit
You'll need an active registration again. We recommend a new account over reactivating.
You sell annual contracts
Periods from January 1 are taxable, even on contracts you signed this year.
Your buyers are businesses
There's no blanket B2B exemption. Finance teams will see tax on renewals.
Where do you stand?
Answer 8 quick questions. Get your readiness score, registration status, revenue impact and a dated plan for January 1. Free, no strings attached.
What do you sell to California customers?
Select all that apply.
Your answers stay in your browser until you ask us to email them.
SaaS teams who stopped worrying about sales tax
What people ask first
Is this a new "SaaS tax"?
No. SB 122 adds digital products, including SaaS, to California's existing sales and use tax. Registered sellers collect sales tax (or use tax, for out-of-state sellers). Buyers owe use tax only where tax wasn't collected.
Does registering now mean I owe tax now?
No. SaaS sold into California isn't taxable until January 1, 2027. Registering early means you're ready to collect on day one. The CDTFA assigns your filing schedule when it issues the registration, so you may have a return for late 2026, but your SaaS sales on it aren't taxable.
My customers are all businesses. Am I exempt?
No. There's no blanket business-to-business exemption. Sales for resale (with a certificate), purchases for use solely outside California, and some government and school buyers can be exempt with the right paperwork.
My customers use our software in several states. Which state gets the tax?
The sale is sourced to the customer's California billing address first. The draft regulations would let buyers allocate tax across states by a reasonable, documented method, such as user counts, but that rule isn't final.
Do I keep filing $0 returns on a closed permit?
No. A closed permit has nothing to file. The action that matters is getting an active registration before January 1.
What's still being finalized?
Bundles, the line between SaaS and platforms, API tokens and credits, multi-state user allocation and the $5 million direct-payment process. The CDTFA planned to send final emergency regulations to the Office of Administrative Law in early December 2026, and a second rulemaking round is possible in 2027.
What does Kintsugi do here?
Kintsugi tracks your California sales from your billing system, submits your CDTFA registration, then files and remits your returns. Monitoring is free; you pay when we register or file.
This assessment is for informational purposes only and does not constitute tax, legal, or professional advice. CDTFA regulations implementing SB 122 are still in draft and may change before January 1, 2027.
Keeping 7,000+ companies sales-tax compliant
