California to Tax SaaS and Certain Digital Products From 2027

What changed

California will begin applying sales and use tax to SaaS, other remotely accessed software and certain digital products on 1 January 2027. The change expands taxation into software and digital-commerce categories previously outside the stated scope.

Why it matters

For SaaS providers and digital-product sellers, the tax becomes part of the commercial equation for California customers. Pricing, checkout and billing systems may need to account for the new treatment, although the applicable rate, product definitions, exemptions and collection rules have not yet been specified.

That leaves companies with a clear deadline but an incomplete rulebook. The practical question is not whether digital commerce is affected; it is which products qualify and how sellers must collect the tax once the change takes effect.