Sales Tax Measures General Information

The California Department of Tax and Fee Administration provides some general information about district taxes. 

What is a district tax?

District taxes are transactions (sales) and use taxes imposed by certain cities, counties, and other local jurisdictions on the sale or use of tangible personal property (merchandise). District taxes are approved by voters in those jurisdictions and are imposed under the Transactions and Use Tax Law. They are added to the statewide base sales and use tax rate of 7.25%.

Not all areas in California impose district taxes. The maximum combined district tax rate within any county may not exceed 2% unless specifically authorized by statute.

Who can impose a district tax?

A county, city, or other authorized government entity can impose a district tax for general or specific purposes*. District tax can be imposed directly by the local government or through a special purpose entity. A county can also create a transportation authority to impose district taxes.

*See Revenue and Taxation Code section 7252.

What is the district rate cap?

The combined rate of all district taxes imposed in any county must not exceed 2% unless specifically authorized by statute*. Generally, tax rates may be imposed at a minimum rate of 0.125% and increase in 0.125% increments up to the 2% cap in a county. Special legislation may vary this format, and, in some instances, a higher district tax rate may be imposed by a district. Any tax increase by the county would generally raise the tax rate in all the cities within that county.

*See Revenue and Taxation Code section 7251.1.

What are the rules to adopt a district tax in a city?