California Proposes Sales Tax on Prewritten Software

• California Governor Newsom proposed expanding sales tax to cover all prewritten (“canned”) software, regardless of delivery method.
• If approved, the change would take effect on January 1, 2027.
• The state estimates about $450 million in General Fund revenue and $560 million in local sales tax revenue for half of FY 2026–27, rising to roughly $900 million and $1.1 billion annually after that.
• California currently taxes prewritten software only when sold on physical media; the proposal would extend taxation to downloads, cloud access, subscriptions, and physical media.
• The move would reduce inconsistencies in the tax system and may be a step toward taxing more digital goods in the future.

Source: lao.ca.gov

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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