Los Angeles

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Taxes on Purchases

Information on sales tax in Los Angeles and how it applies to goods and services.

Sections

1. Overview of Sales Tax in Los Angeles

Sales tax is a consumption tax imposed on the sale of goods and services in Los Angeles. It is a combination of state, county, and local taxes. The total sales tax rate in Los Angeles is 9.5% as of October 2023. This rate applies to most retail purchases, including goods and some services.

2. Breakdown of Sales Tax in Los Angeles

The 9.5% sales tax in Los Angeles is composed of:

  • California State Sales Tax: 7.25%
  • Los Angeles County Sales Tax: 2.25%
    • This includes local measures such as transportation funding and public services.

3. Categories of Taxable and Non-Taxable Items

Taxable Items

Most tangible goods and some services are subject to sales tax in Los Angeles. Examples include:

  • Clothing
  • Electronics
  • Furniture
  • Household goods
  • Restaurant meals and prepared food
  • Alcoholic beverages

Non-Taxable or Exempt Items

Certain items are exempt from sales tax in California, including:

  • Groceries: Unprepared food items like fruits, vegetables, and packaged goods are tax-exempt.
  • Prescription Medications: Medications prescribed by a licensed healthcare provider are not taxed.
  • Medical Devices: Items like wheelchairs, crutches, and prosthetics are exempt.
  • Utilities: Gas, electricity, and water are not subject to sales tax.

4. Special Considerations for Tourists

Tourists visiting Los Angeles should be aware of the following:

  • No VAT Refunds: Unlike some countries, the United States does not offer a Value-Added Tax (VAT) refund for tourists. Sales tax is non-refundable.
  • Hotel Taxes: In addition to sales tax, hotels in Los Angeles charge a Transient Occupancy Tax (TOT) of 14%, which is added to your bill.
  • Car Rentals: Renting a car in Los Angeles includes sales tax, as well as additional fees like airport surcharges and vehicle license fees.

5. Procedures and Exemptions

For Businesses

  • Businesses purchasing goods for resale can avoid paying sales tax by providing a Resale Certificate to the seller. This certificate must include the buyer's seller's permit number and a statement that the goods are for resale.

For Nonprofits

  • Certain nonprofit organizations may qualify for sales tax exemptions on specific purchases. Nonprofits must apply for and provide proof of their tax-exempt status.

For Native Americans

  • Purchases made by Native Americans on tribal land may be exempt from sales tax under specific conditions.

6. Tips for Local Shopping and Tourist Activities

Shopping Tips

  • Price Tags: In the U.S., sales tax is not included in the price tag. Be prepared to pay an additional 9.5% at checkout.
  • Outlet Malls: Los Angeles has several outlet malls where you can find discounted goods. However, sales tax still applies to these purchases.
  • Luxury Goods: If you're purchasing high-value items like jewelry or designer goods, factor in the sales tax, as it can significantly increase the total cost.

Dining Out

  • Sales tax applies to restaurant meals and takeout food. Tipping (15-20% of the pre-tax bill) is customary but not included in the sales tax.

Souvenirs

  • Souvenirs like T-shirts, mugs, and keychains are subject to sales tax. Budget accordingly when shopping for gifts.

Online Shopping

  • If you shop online and the retailer has a physical presence in California, sales tax will be applied to your purchase. For out-of-state retailers without a California presence, you may still owe use tax on your purchase.

7. Additional Considerations

  • Use Tax: If you purchase goods outside of California and bring them into Los Angeles for use, you may owe use tax at the same rate as the sales tax (9.5%). This is self-reported on your California income tax return.
  • Tax-Free Shopping Days: California does not currently offer tax-free shopping days, unlike some other U.S. states.

8. Resources for More Information

  • California Department of Tax and Fee Administration (CDTFA): For detailed information on sales and use tax, visit www.cdtfa.ca.gov.
  • Los Angeles County Tax Collector: For local tax-related inquiries, visit https://ttc.lacounty.gov.

By understanding these details, you can better plan your purchases and budget for your time in Los Angeles. Whether you're a resident or a visitor, being aware of sales tax rates and exemptions will help you navigate the city's shopping and dining experiences with ease!