San Diego sales tax rates and your books

Current rates in San Diego County

California's statewide rate is 7.25%. Cities and counties can add district taxes on top. The California Department of Tax and Fee Administration (CDTFA) publishes the combined rate for every city each quarter. The table below comes from the CDTFA list effective October 1, 2026.

Voters approve new district taxes and old ones expire, so these rates change. CDTFA says a ZIP code or mailing address does not always show the right rate. Look up the exact address on CDTFA's rate tool before you set up a register.

Breweries, restaurants and tips

CDTFA's dining guide treats hot prepared food as taxable, including food sold to go. Cold food sold to go is generally not taxable. A special 80/80 rule can make cold to-go food taxable for sellers whose sales are mostly food. Beer, wine and soda poured in a taproom are taxable sales.

Tips need care. Under CDTFA Publication 115, a tip the guest writes in on a blank line is optional and is not part of taxable sales. A mandatory service charge is taxable, even if you pass every dollar to staff. A printed menu note that a charge will or may be added also makes it mandatory.

In the books, keep optional tips, mandatory service charges and food sales on separate POS items. Then each one lands in its own account, and the return pulls the right numbers.

Short-term rentals: occupancy tax, not sales tax

CDTFA lists charges for the use of real property, such as hotel rooms and houses, as outside sales tax. So the nightly rate on a Pacific Beach or Ocean Beach rental is generally not a sales tax item. Cities charge transient occupancy tax (TOT) on those stays instead.

TOT rules and rates differ by city. See short-term rental bookkeeping, and the city pages for Encinitas and Oceanside.

Labs and defense contractors: use tax on equipment

Use tax is the twin of sales tax. It applies when you buy taxable goods for use in California and the seller charges no California tax. A Sorrento Valley lab that orders a centrifuge from an out-of-state supplier is a common case. CDTFA says the use tax rate matches the sales tax rate where the item is used.

If you hold a seller's permit, report those purchases on your sales and use tax return. Businesses without a permit have other ways to report, which CDTFA Publication 123 lists.

Some buyers pay less. CDTFA's partial exemption covers qualifying manufacturing and research and development equipment bought before July 1, 2030. Research firms must fall under NAICS code 541711 or 541712, and manufacturers under 3111 to 3399. The buyer gives the seller a CDTFA-230-M certificate. Whether your company qualifies is a question for your CPA.

Online sellers shipping across the county

District tax follows the delivery address when you are engaged in business in that district. CDTFA says a retailer with more than $500,000 in combined California sales in the current or prior year is engaged in business in every district in the state. Below that amount, you are engaged in business where you have a physical presence, such as a warehouse or your own delivery vehicle.

Example: an Encinitas shop that delivers in its own van to an Escondido customer charges the Escondido rate. If you are not engaged in business in the buyer's district, the buyer owes that district use tax, not you. Your ecommerce platform needs the correct setting for this.

Seller's permit and filing schedule

• CDTFA charges no fee for a seller's permit. It may ask for a security deposit.
• CDTFA assigns your filing schedule based on your expected or reported tax. The options include monthly, quarterly, quarterly with prepayments, and yearly.
• For quarterly filers, the four deadlines fall on January 31, April 30, July 31 and October 31. Prepayments, where required, are due on the 24th of the month after each prepay period.
• A slow quarter with zero sales still needs a return, filed on time.

Keeping sales tax right in your books

1. Book tax as a liability Sales tax you collect goes to sales tax payable, not income. Your gross sales on the P&L should exclude it.
2. Reconcile before each return Compare tax collected in the POS or shop, the payable balance in QuickBooks, Xero and more, and the return. Find any gap before you file.
3. Clear the payable after you pay Record the CDTFA payment against sales tax payable. The balance should then drop to the tax for the open period only.
4. Update rates each quarter When CDTFA posts a new rate list, update the tax rates in your POS, your accounting software and your online store on the same day.

Questions