California State Income, Sales and Use Tax | Tax Attorneys in Roseville, CA

California's State Tax System

California administers several distinct state tax systems, each overseen by a different agency. The California Franchise Tax Board (FTB) administers personal income tax and corporate income/franchise tax. The California Department of Tax and Fee Administration (CDTFA) oversees sales and use tax, as well as numerous other excise and special taxes. The Employment Development Department (EDD) administers payroll taxes. Understanding which agency has jurisdiction — and how to navigate each — is essential to effective tax representation.

California Income and Franchise Tax

California imposes one of the highest state income tax rates in the nation, with a top marginal rate of 13.3% for high-income individuals. Businesses operating in California are generally subject to either the corporate income tax (8.84%) or the franchise tax ($800 minimum), depending on entity type. Nonresidents with California-source income — including income from California real estate, business operations, or certain pass-through entities — also have California income tax obligations.

California Sales and Use Tax

California's statewide sales tax rate is 7.25%, but local district taxes can bring combined rates to 10.75% or higher in some jurisdictions. Businesses that sell taxable goods at retail must collect sales tax from purchasers and remit it to the CDTFA. Use tax applies to taxable goods purchased outside California for use within the state.

Common compliance issues include nexus determinations for remote sellers, taxability of digital goods and SaaS products, exemptions for manufacturing equipment and food products, and drop-shipping arrangements.

Defending Against FTB and CDTFA Audits

Both the FTB and CDTFA conduct routine and targeted audits of businesses and individuals. Audit outcomes can include significant back tax assessments, interest, and penalties. Our tax attorneys represent clients through agency examinations, protest proceedings, and appeals to the California Office of Tax Appeals.