Los Angeles Sales Tax Guide for Businesses

No matter where you live or where your online business is based — if you have customers in Los Angeles, you must follow city and local sales tax rules in addition to California’s rules. That’s what this guide is for! This guide includes everything you need to know about online sales tax laws in Los Angeles, whether your customers live in Silver Lake or Venice Beach.

Los Angeles Tax Jurisdiction Breakdown for 2024

• California State Sales Tax: 7.25%
• Los Angeles County Sales Tax: 2.25%
• Los Angeles City Sales Tax: 0%

What is the sales tax rate in Los Angeles, California?

The minimum combined 2024 sales tax rate for Los Angeles, California is 9.5%. This is the total of state, county, and, where applicable, district sales tax rates.

The California sales tax rate is currently 7.25%. The Los Angeles County sales tax rate is an additional 2.25%. There is no additional city sales tax specifically for the city of Los Angeles.

These rates go for standard taxable products. But other taxes and tax rates might apply to your business.

If you’re selling “vice” products like tobacco or alcohol, you might have an increased rate. Los Angeles imposes additional taxes on specific goods and services, including a Sugary Drinks Tax and an Alcohol Mitigation Tax.

On the other hand, if you’re selling essential items, such as medicine and clothing, or educational materials, you might have an exempt or reduced rate. More on that in the next section!

What products are exempt from the Los Angeles sales tax rate?

• Digital services and products, as long as there’s no physical good accompanying the sale.
• Software-as-a-Service (SaaS) products
• Medicine and certain medical devices.
• Most grocery food items.
• Diapers and some other hygiene products.
• Utilities and services used directly and exclusively in manufacturing or production.

What digital products are taxed in Los Angeles?

The short answer is: none! California is one of the few US states that does not apply sales tax to digital products.

But let’s confirm what you’re trying to sell in Los Angeles. Are you selling digital products?

A digital product is any product that’s stored, delivered, and used in an electronic format. These are goods or services that the customer receives via email, by downloading them from the Internet, or through logging into a website.

You’re probably consuming and using digital products all day long, whether or not you realize it. Here are some common ones on the market today:

• E-books, images, movies, and videos, whether buying a copy from Shopify or using a service like Netflix. In tax language, these products are in a category usually called, “Audio, visual, or audio-visual products.”
• Downloadable and streaming music, whether buying an MP3 or using a service like SoundCloud or Spotify. Of course, these products also fall in the audio category.
• Cloud-based software and as-a-Service products, such as Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS).
• Websites, site hosting services, and internet service providers.
• Online ads and affiliate marketing. Income from these services can be considered taxable under digital tax policies.

Some US states can have more specific definitions or exceptions. They can tax certain digital products (like online courses) and exempt others (like SaaS). But in Los Angeles, none of these are taxed unless they are accompanied by a physical product of some kind.

How does Los Angeles sales tax compare to the rest of California?

Los Angeles’s combined sales tax rate of 9.5% is at the higher end compared to the rest of California, where rates can vary from 7.25% to more than 10% in some cities and counties due to the addition of local district taxes. This reflects the city's approach to addressing local issues and funding city services through the sales tax system.

Learn more about sales tax rules state-wide in this business guide to sales tax in California.

What creates sales tax nexus in Los Angeles?

Since Los Angeles is located in California, it follows the same state-level sales tax nexus rules.

Forms of California state sales tax nexus include:

• Economic nexus: When a business sells goods worth $500,000 or more within the previous or current tax year. More on that below!
• Physical location: This could be an office or a warehouse holding your inventory.
• Employee location: If you have an employee or any other type of representation based in a particular state or city, your business must register for sales tax there.
• Affiliate nexus: If you rely on in-state businesses to promote and refer your business, and you receive a substantial amount of income through these affiliates, then you have sales tax nexus.
• Trade shows: Even if you don’t have real estate in a place, if you visit trade shows or markets for more than 15 days in the calendar year, that’s enough of a physical present to constitute sales tax nexus in California.

Los Angeles economic nexus as a remote seller

If your business is fully located outside of California, then economic nexus is your main concern. Here’s how it works.

The economic threshold amount refers to your total sales in the whole state, during any 12-month period. This can be a calculation of sales in the last twelve months, or a prediction of sales in the next twelve months — any rolling year-long period, past or future.

Basically, if your annual sales in California remains below $500,000, then you don’t need to worry about sales tax at all. Phew!

But once your sales do surpass $500,000, then you must register for sales tax and comply with all of the California rules around tax rate and collection, invoices, and filing returns.

Who needs a seller’s permit in Los Angeles?

Any business with sales tax nexus, according to the rules above, must apply for a seller’s permit in California right away.

The seller’s permit comes with a sales tax registration number, which establishes you in the California tax system as a legal business. This number tracks your business through the system: the taxes you pay, the tax credits you receive, plus the tax you charge from customers.

How to get a seller’s permit in Los Angeles

So, it turns out you do need to register for tax in Los Angeles. Don’t worry! Just follow these instructions on how to register for sales tax in California and that will cover you across the state.

How to calculate Los Angeles sales tax?

Once you’re registered for taxes, you’re expected to apply sales tax to every taxable sale to a Los Angeles resident. That means 9.5% for most products.

If your customer is a fellow business, and they’ve provided a valid sales tax exemption certificate, then adding and collecting tax isn’t necessary.

How to collect sales tax in Los Angeles

Tax-compliant receipts in Los Angeles

In order to comply with tax laws, you should include the following information on your receipts or invoices to customers in Los Angeles:

• Your business’ name and address
• Your business’ sales tax registration number
• Invoice date
• Invoice sequencing number
• Buyer’s name and address
• Buyer’s sales tax registration number, if they have one.
• sales tax (amount and rate) applied to each item
• Final amount after tax is added

The easiest solution for the sales tax receipt would be to use a sales tax software that automatically generates and sends all invoices (as soon as the sale is complete), and also stores them in the cloud for you.

Quaderno provides automatic tax invoicing for every transaction. The app sends tax-compliant receipts, invoices, and credit notes automatically, on the spot. You can also set up recurring invoicing.

In fact, Quaderno helps automate many other parts of tax compliance, from adding the correct tax rate calculations to your sales to providing instant reports for filing returns. Give it a try for free.

How to file and pay sales tax in Los Angeles

Charging and collecting tax is only the first half of staying compliant. The second half is filing returns and paying whatever you might owe to the government.

Frequency for sales tax returns in California:

• Businesses selling less than $100,000 a year in taxable goods must file quarterly.
• Businesses selling over $100,000 a year must file monthly.

California sales tax returns are due on the last day of the month following the reporting period. So that means the April tax return is due by May 31. If the due date falls on a weekend or holiday, then your sales tax filing is generally due the next business day.

You can usually file and pay online! Check out more instructions on how to file sales tax in California.