California is one of 45 states that levy a SUT with only Alaska, Delaware, Montana, New Hampshire, and Oregon not levying one. California's state-level SUT was established in the 1930s and its local SUT emerged in 1955. The sales tax, begun in 1933, is imposed on retailers selling tangible personal property in California. The SUT is a tax on final sales of tangible personal property, such as clothing, household furnishings, appliances, and motor vehicles.
Services are largely exempt from taxation, although California does tax a few.
Services are indirectly taxed, however, to the extent that their cost is incorporated into the final prices of tangible goods. The SUT rates in California differ by county, and range from 7 percent to 8.25 percent, depending on whether a county chooses to levy optional taxes. The maximum optional SUT rate is 1.50 percent. Special district taxes are allocated to the appropriate local district. Regarding the optional SUTs that localities can levy, these average 0.67 percent on a statewide basis, and are levied in 24 of California's 58 counties.