Is clothing taxable in California?
by January 6, 2024
Please note: This blog was originally published in 2022. It’s since been updated for accuracy and comprehensiveness.
In most states, clothing is considered tangible personal property and is subject to sales and use tax. But some US states consider clothing tax exempt, or have designated certain retail sales exempt, while making others taxable. This is the case in California, where not all clothing is taxable.
We’ll cover everything an e-commerce company needs to know about when to charge sales tax on clothing purchases in the state of California.
California clothing taxability
In California, clothing is taxable at the state sales tax rate of 7.25%, plus any local sales tax. However, there are a few exceptions. Here are two scenarios where clothing items would fall under a sales tax exemption:
- The sale of new children’s clothing is exempt if sold to a qualifying non-profit organization for distribution without charge to elementary schoolchildren.
- Certain thrift stores are exempt from sales tax if they meet a set of qualifications.
Alteration charges to new clothing are also taxable. For embroidery, unless the retail value of the thread is more than 10% of the total charge, or the charge for the thread is separately stated, the charge for embroidery is tax exempt. Clothing samples are generally exempt from sales tax as well.
What retailers need to know to be compliant
Get the guideHow to automate California sales tax collection
Do you sell clothing online? California is just one of many US states where clothing taxability varies. If you accidentally collect sales tax on a product that isn’t taxable, you create a negative customer experience. But if you don’t collect sales tax on a product that was actually taxable, you end up owing that sales tax out of pocket when it comes time to file your sales tax returns with the state, not to mention you could be on the hook for penalties.
That’s why TaxJar has your back. With the TaxJar API, you can be sure you’re collecting the right amount of sales tax. Our product tax codes ensure you collect sales tax on qualifying purchases, and exempt items that are not taxable.
Ready to automate sales tax collecting, reporting and filing? To learn more about TaxJar and get started, visit TaxJar.com/how-it-works.
