Vital News: California to Tax SaaS Soon | Nossaman LLP

California will impose sales tax on SaaS and downloadable software effective 2027, expanding its definition of taxable 'tangible personal property' to include all digital products regardless of delivery method. The law carves out exceptions for streaming services, video games, NFTs, and services driven primarily by human effort, with sourcing rules tied to customer billing address and a $5m annual threshold for customer self-assessment. If you sell SaaS from California or to California customers, your tax bill just grew and your compliance stack needs rebuilding before January 2027. Start mapping your customer base by state and billing address now—the tax rate varies by county, and your sourcing rules just changed.