California expands sales tax to SaaS starting 2027

California Governor Gavin Newsom signed the 2026-2027 state budget, which includes a trailer bill expanding California's sales tax to cover SaaS, effective January 1, 2027. This marks the first time California applies sales tax to software and technology services.

The bottom line: Businesses selling SaaS into California need to register, collect, and remit California sales tax starting January 1, 2027. Update your tax compliance systems and billing processes before the implementation date.