California imposes sales and use tax on digital products and SaaS

California will impose sales and use tax on digital products, including prewritten software and SaaS, effective 1 January 2027. The tax applies to all remote digital goods and services sold to California residents, expanding the state's tax base beyond traditional goods. If you sell SaaS into California, your effective price just went up by up to 8.625% on 1 January 2027 unless you raise your list price or absorb the tax. Start now: audit which customers are registered in California, model the margin impact state-by-state, and decide whether to rebrand the tax as a separate line item or fold it into your contract renewals.