- Proposed expansion of sales tax scope: California is considering extending sales tax to electronically delivered software, including cloud-based solutions and digital downloads, which are currently generally out of scope.
- Effective date and legislative dependency: If approved, the measure would take effect on January 1, 2027, marking a significant shift in the state’s taxation of digital services.
- Shift from tangible to digital taxation: The proposal would move beyond the current rule—where tax typically applies only to prewritten software sold on physical media—reflecting the broader trend of taxing the digital economy and SaaS models.
Source Sovos
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