california travel tax

Fraud and Compliance

What are state tax implications for traveling employees.

Imagine a time when all work happened onsite at a business location within easy driving distance of your home – a simple time, to be sure. Today’s work reality is much more complex with workers in-office, remote, and everywhere in between. With more business travelers getting on the road again , some employees spend more time traveling than in any one office. 

And while you might think that managing travel-related taxes within the U.S. would be relatively straightforward, it turns out state-to-state tax codes are far from united. This creates issues for travelers and businesses alike. 

To comply with complicated state tax regulations, organizations need to enhance their processes and increase their understanding of where travelers are, how long they’ll be gone, and the type of work they’re doing. Not just in the U.S., but globally. 

However, when a company’s process for understanding its travel footprint is inefficient, it can cause inconveniences for business travelers, complexity for travel and finance managers, or bigger business implications like fines. 

How to Reduce Risk and Manage Tax Compliance in a Work-from-Anywhere World

Are employers required to withhold out-of-state taxes.

Whether an employer needs to withhold out-of-state taxes depends on various factors. But if you have business travelers, it’s crucial to know where your company stands.  

The rules vary for withholding income tax on employees who temporarily travel outside of their resident state for work. This requires payroll managers to navigate different filing rules for all states, territories, and hundreds of municipalities. 

For example, more than half of states that have a personal income tax require employers to withhold tax from a nonresident employee’s wages beginning with the first day that employee travels to their state for business. Other states have a threshold that must be reached before income tax is withheld for nonresident employees. 

If your business travelers are wondering, “If I travel for work, where do I pay taxes?” The answer may not be simple. In some cases, employees could also be legally required to file an income tax return in every state they travel to for work — even if just for one day. 

Get the guide: Enhance your compliance and spend management with SAP Concur solutions  

How Do State Taxes Work for Business Travelers? 

If your employees travel out of state – or out of the country – it’s imperative to stay on top of tax compliance for your travelers. 

Remember that tax regulations are subject to change and it’s important to verify the latest rules for the locations where your employees travel for business. 

States That Impose Income Tax on Business Travelers 

The following states impose income tax on the first day nonresidents work in their state, so make sure you’re addressing tax compliance for any employee that travels to these places. 

• Massachusetts 
• Mississippi 
• New Jersey 
• North Carolina 
• Pennsylvania 
• Rhode Island 

And these states impose income tax on nonresidents after a state-specific threshold is reached. The threshold varies by state. 

• California 
• Connecticut 
• New Mexico 
• North Dakota 
• South Carolina 
• West Virginia 

States That Don’t Impose Income Tax on Business Travelers 

The following states do not impose state income tax on business travelers. But again, it’s always important to stay up to date on tax rules, as they’re subject to change. 

• New Hampshire 
• South Dakota 
• Washington 

See: How Hybrid Work Raises Your Tax Risk and Complexity  

How Do You Stay Compliant with Business Travel-Related State Taxes? 

So, how can you ensure that your company complies with state- or country-specific tax requirements for traveling employees? You can start by adopting a fully integrated technology solution into your company’s travel booking workflow. 

Because it comes down to payroll teams to know — and navigate — state tax implications for traveling employees, consider choosing a solution that gives your team a comprehensive view of travel and spending, plus the ability to manage interstate payroll taxes. 

Look for a solution that enables your teams to handle multi-state and cross-border payroll tax compliance. Even better if it can automatically track tax and payroll requirements as the employee travels to different locations. 

For example, an organization using Concur Travel can also connect with an SAP Concur integration that makes it easier for businesses to comply with complex tax regulations .  

To learn more about how you can help your company better navigate tax complexities, download our whitepaper, A Finance Leader’s Guide to Tax Compliance . 

Travel Nurse Tax Guide 2023

Navigating travel nurse taxes can be a challenge, especially because travel nurse tax amounts can be a bit different depending on what state or states you worked in. In general, however, taxes are very different for travel nurses compared to traditional staff nurses. From choosing a tax home to keeping your receipts to knowing exactly how your income will affect your long-term financial goals, here is the information you need to know about travel nurse taxes.

RN’s can earn up to $2,300 per week as a travel nurse. Speak to a recruiter today!

Travel Nurse Taxes + Income Breakdown

Travel nurses are paid differently than staff nurses because they receive both a base hourly pay that is taxed and additional “payments” that are non-taxed to make up their “total” pay. When you sign up to commit to a travel nurse position you’ll receive a pay package that will detail all of the different aspects of what will make up your actual compensation.

Essentially it’s in the travel nursing agency’s best interest to keep the base rate of a travel nurse’s pay package low, so many travel nurses have a modest base pay but will receive additional stipends. In a technical and legal sense, those additional stipends — which typically cover things like meals, housing , and work-related expenses — are expense reimbursements for doing your job as a travel nurse, which is why they aren’t considered income and are non-taxable.

Travel agencies offer “standardized” bill rates. This means that there is one rate for all workers with any given license covered by the contract. For example, all Registered Nurses have the same bill rate, all Physical Therapists have the same bill rate, and so on. It’s also possible for the licenses to be broken down by specialty and every so often by level of experience. For example, Medical Surgical and Telemetry Registered Nurses have one rate while all other Registered Nurses have another. Registered Nurses with 1-3 years of experience get one rate, while those with more than 3 years of experience get a slightly higher rate. The important thing to understand is that standardized bill rates are set in stone by the contract for all intents and purposes. There is no possibility of negotiating a higher bill rate based on a particular travel nurse’s salary history or work experience.

Joseph Smith, EA/MS Tax, an international “taxation master” and founder of Travel Tax , explains that in addition to their base pay, most travel nurses can reasonably expect to see $20,000-$30,000 of non-tax reimbursement payments in a typical year working as a travel nurse.

Find travel nurse credit cards to earn points or miles while traveling.

Qualifying For Non-Taxable Income

In order to avoid being taxed on those reimbursement payments, however, you need to clearly prove that you have what’s called a “tax home” to the IRS. The IRS defines a tax home as “the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home.”

Smith explains that you can qualify for a tax home in two main ways:

• If your primary area of residence is also your main area of income, which typically does not apply to travel nurses.
• You visit your primary residence at least once every 12 months and can prove that you are paying for expenses to maintain your primary home.

If you can’t prove that you have a tax home, or don’t meet the qualifications for having a tax home, you will be taxed on the stipend payments you receive as part of your travel nurse pay package. Additionally, Smith cautions that most travel nursing agencies will not verify that you qualify for a tax home, so it’s up to you, the travel nurse, to ensure that you are meeting all requirements for establishing a tax home in order to collect your non-taxable stipends.

Joseph Smith, EA/MS Tax, an international “taxation master” and founder of Travel Tax, explains that in addition to their base pay, most travel nurses can reasonably expect to see $20,000-$30,000 of non-tax reimbursement payments in a typical year working as a travel nurse.

While many people commonly believe that you must have your tax home at least 50 miles away from where you work as a travel nurse, there’s actually no specific distance requirement . The only real requirement is that you must prove that it’s farther away than a reasonable commute and requires rest and sleep before going back and forth.

You should always check with a tax professional, but in general, travel nurses can take the following steps to help ensure that they qualify for a tax home in the eyes of the IRS:

• Keep proof of any payments you are making to show that someone else is maintaining your primary residence, such as receipts for a house sitter, mortgage, rent, utilities, or home maintenance expenses.
• Maintain your driver’s license and voter registration in your home state.
• Keep your car registered in your home state.
• Keep a per-diem position, if possible, in your home state.
• Return to your permanent home at least once every 13 months.
• File a Residence Tax Return with your home state.

To file taxes correctly, it’s very important to maintain your tax home and prove that you have to actually pay for “double” of everything—for both your tax home and your new living situation as a travel nurse. That means that if you rent out your home temporarily while you’re gone, you no longer can classify it as a tax home.

What About State Taxes?

Travel nurses should plan on filing their taxes by the April 15th deadline, just like everyone else in the United States, although there may be a little wiggle room for extensions due to the nature of being a multi-state professional as a travel nurse, according to Smith. Every state has different laws for filing taxes, but travel nurses may need to file a non-resident tax return in every state they have worked in, as well as the state that they consider their permanent tax home.

Travel Nurse Tax Tips

Smith advises travel nurses to keep a receipt book to help them make tax preparation a little easier by having all of their paperwork in one place. Although digital receipts may be more convenient or “modern” for younger nurses, keeping paper copies as a backup is always recommended. Your receipts can include things like:

• Housing and lodging expenses while traveling
• Mileage travel
• Uniform and scrub expenses
• Work-related expenses, such as continuing education courses or certifications you must maintain to keep your position
• Costs for Internet and phone providers

The 2022 tax reform laws did away with many job expenses at the federal level , which means that travel nurses can’t deduct certain travel-related expenses such as food, mileage, and gas on their federal return. You can still get a stipend or reimbursement from your travel agency for those expenses, but they may not count as deductions.

That being said, a handful of states still allow job expense deductions on your state tax return, such as New York , California , Alabama, Hawaii , and Arkansas, so there may be additional tax deductions you can make if you’ve worked in a qualifying state.

Smith also adds to be careful when filling out residency on your tax return, as he sees many travel nurses make the mistake that working a travel assignment means they have moved. However, working a temporary (under 12 months) travel nursing position does not qualify as a move of your permanent residence — instead, they are just away from home temporarily and that’s an important distinction to make come tax time.

Keep your tax home as a permanent residence address, and don’t change it unless you actually move permanently!

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Can You Get Audited As A Travel Nurse?

The travel nursing industry as a whole does tend to be scrutinized closely, says Smith. As a travel nurse, you may be more at risk for an audit if you’re displaying high expenses and low income. For instance, if your mortgage is $10,000 a month, but your overall income with your base pay as a travel nurse is only $20,000 annually, the IRS may be puzzled as to how you’re actually affording your lifestyle.

You can reduce your risk of an audit, or increase your risk of getting through an audit favorably by always making sure to work with a certified tax professional who is familiar with traveling healthcare professionals and not solely relying on your nurse recruiter or travel staffing agency for tax advice.

Lower Taxable Income Considerations

One of the appeals of travel nursing is that you have the potential to make a high income, especially through non-taxed stipends. And although at first glance, having non-tax stipends for things like housing may sound like a great deal for you as a travel nurse, it does come with a catch: because the additional stipends you receive as a travel nurse are not taxed, they are not considered income, and as such, will not be reflected in your annual income.

That may not sound like that big of a deal unless you find yourself in need of a loan, mortgage, or disability payment, or are nearing the age to collect Social Security. All of the aforementioned items are calculated based on your income. The lower your income, the lower the loan amount you will qualify for, and the less you are contributing to Social Security and therefore will be eligible to collect when you’re ready for retirement.

If you know that you will be needing a loan or a mortgage in the near future, Smith suggests talking to your lender as far in advance as possible to explain your situation and plan ahead. Working with a lender who is familiar with the pay structure for travel nurses can also be helpful.

In some circumstances, such as for nurses who are nearing Social Security’s retirement age, it may also be helpful to legally declare that you don’t have a tax home on your tax return, and instead, pay taxes on all of your stipends, so you can count it as taxable income.

And remember – you should use this guide as information to help you learn more about filing taxes as a travel nurse but remember that it is not tax advice. You should always consult your own CPA or tax professional before filing your tax return.

Travel Nurse Tax FAQs

Yes, all travel nurses must pay taxes on all income that they earned. They will need to file a tax return for every state that they worked in, as well as their home state where they have permanent residence.

If possible, it’s always beneficial to work with a tax professional, such as a Certified Public Accountant who can help you file and pay taxes that you owe as a travel nurse. An accountant can provide you with the physical paperwork that you can use to mail your tax payment in or help you set up an online account if digital payments are acceptable. If you file your own taxes using TurboTax or another software, you will be provided with the exact mailing address and instructions to submit payment. If you don’t have one already, you may need a book of checks in order to pay your taxes. The most important thing you need to know about paying taxes as a travel nurse is that you will need to both pay taxes and file a tax return in every single state you have worked in. If you’ve worked in many different states, that’s where hiring a CPA can be very helpful to help you navigate all that paperwork and payment.

It depends. American Traveler explains that you may end up paying taxes in every state you worked in as a travel nurse, depending on which states those are. Some states have what’s called a “reciprocity” agreement, which means that they have agreed that travel nurses working in those states will only be responsible for paying taxes to one state in total. You will have to check with your accountant or look into the tax rules for each state that you’ve worked in to determine exactly how much you owe in taxes. You should also check with your travel nursing agency if this is your situation because you will most likely need to file tax exemption paperwork through them as well. You will also need to pay taxes in both your home state and any state you worked in. That means that all income you make will be ultimately taxed through your home state taxes as well as the state where you earned the money. That might look like getting taxed twice, but the good news is, your home state will deduct the difference if the percentage rate of your home state is higher. And if it’s the other way around, you will generally only pay the higher state rate. This can get a little confusing, which is why we recommend hiring a tax professional.

Some states do not have an income tax , including Alaska , Washington , Wyoming, Nevada, South Dakota, Tennessee, Texas , Florida , New Hampshire, USVI, and the District of Columbia (if you don’t live there.) If you live in one of these states, you will still need to pay any set income tax rate in the state where you work. If you don’t live in those states but you do work in those states, you will still pay your home state tax rate, so be sure you keep that in mind with your total earnings so you can have enough to pay your taxes come tax time.

This depends on if you’re considered a W2 employee or a 1099 contractor, but in general, travel nurses may be able to deduct the following expenses: – Mileage or the cost of gas – A rental car – Uniform and equipment costs – Continuing education – Licensing fees – Travel expenses – Some meals – Retirement and insurance contributions – Expenses that go into paying for your tax home

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Everything You Need To Understand About Traveling Nurse Taxes

• October 4, 2022

We all know it’s time for tax season when April rolls around! Being a traveler is an exciting adventure, and the opportunity to work in the best travel nurse destinations is quite the experience. But as wonderful as this opportunity can be, travel nursing still has its unique challenges. 

One of these challenges is ensuring you’re keeping track of information relevant to your travel nursing position to pay taxes correctly. How much should you pay in taxes? Where should you pay them, in your home state or the states you’ve worked? It can sound more challenging than it is. Learning about specific details regarding your income taxes can help you maintain your excitement and passion for travel nursing while allowing you to do what you do best. Here’s what every travel nurse needs to know about their taxes for the upcoming year.

Top Thing to Know About Travel Nurse Taxes

Tax homes and state income taxes .

Many travelers may confuse a tax home with a permanent home. The average person’s tax home and permanent home are the same places where they earn most of their income. Since travel nurses make money outside their homes, it looks a bit different. If you live in Arizona, for example, but take an assignment in Oregon that lasts for several months, your new tax home might end up being Oregon because you spent more time living and working there. 

A general rule for travel nurses is not to stay at one travel nurse assignment for more than 12 months to prevent a switch. However, in most circumstances, applicable state taxes are due in the states where you worked throughout the year. When this happens, your tax home becomes where you pay your state taxes. So even though your physical residence may be in Arizona, you will pay taxes in Oregon because that’s where you spent most of your time. 

As a travel nurse, you will always pay state income taxes except in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. You may want to consider these states when searching for travel nursing jobs. Check state laws to see if you have to pay state income taxes in more than one state. Always talk to a tax professional if you have questions about where you owe taxes.

Travel Nurse Non-taxable Income

To qualify for non-taxable wages, travel nurses must have proof of their tax home. To ensure you are eligible for a tax home in the eyes of the IRS:

• Keep proof of any payments you make to show that someone else maintains your primary residence. (I.e., receipts for a house sitter, mortgage, rent, utilities, or home maintenance expenses).
• Maintain your driver’s license and voter registration in your home state.
• Keep your car registered in your home state.
• Return to your permanent home between every contract.
• File a Residence Tax Return with your home state.

If you can’t prove that you have a tax home or don’t meet the qualifications, you will be taxed on the stipend payments you receive as part of your travel nurse pay package.

Other Tax Advantages for Travel Nurses

Besides exploring the country, there are a handful of other benefits for travel nurses that give them tax advantages. Travel nursing stipends cover duplicated living expenses like housing, travel, and meals. They’re not reported as taxable income as long as you prove it’s a duplicated expense. For example, if you’re still paying for utilities at your permanent home but renting short-term housing for your travel nurse assignment, that is a duplicated expense.

Travel nurses receive reimbursements for business-related expenses paid for out-of-pocket that their employer pays back. This is typically done in the form of an expense report. Save all receipts to submit to your employer, and the money you’re reimbursed is tax-free. 

Under the new 2018 tax laws, travel nurse tax deductions or write-offs are no longer available. Travel nurses can no longer deduct travel-related expenses—food, mileage, gas, and license fees—and will have to recover these funds through a stipend from their travel nurse agency or in the form of reimbursements for expenses actually sustained.

Beware Of Audits

While the chances are relatively low, travel nurses are more likely to be audited than the average person. This is because the expenses-to-income ratio can look a little suspicious. You could be more at risk if you display high expenses but a low income. It’s always a good idea to prepare and have a paper trail for everything. 

To get through or avoid an audit, find a certified tax professional familiar with traveling healthcare professionals and do not rely solely on your travel nurse recruiter or travel nursing agency for tax advice. Better to be safe than sorry!

Travel nurse taxes can be intimidating, but it becomes easier once you get into the swing of things. When in doubt, consult a professional to guide you through the process. Give yourself plenty of time to prep to put yourself in the best position moving forward!

Ready for your next travel nurse assignment? Check out our job board for the latest travel nurse jobs in the top travel nurse locations !

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California State Income Tax Rates and Brackets (2023-2024)

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Skip below to learn more about California state tax:

California state income tax rates and brackets

California tax deadlines

California standard deduction amounts

California tax credits

Tracking your California tax refund

California state sales tax

California state income tax brackets and rates.

There are nine California state income tax rates, ranging from 1% to 12.3%. Tax brackets depend on income, tax filing status, and state residency. California also levies a 1% mental health services tax on income exceeding $1 million.

These are the state tax rates and tax brackets that apply to income earned in 2023 (reported on 2024 returns).

CA tax brackets: Single or married filing separately

Ca tax brackets: married filing jointly or qualifying widow(er), ca tax brackets: head of household.

Source: California Franchise Tax Board [0] State of California Franchise Tax Board . 2022 California Tax Rate Schedules . Accessed Dec 4, 2023. View all sources

Note: If your taxable income was $100,000 or less, use the tax table on the California Franchise Tax Board's website to figure taxes owed instead

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California income tax deadlines and extensions

California state income tax returns follow the federal tax deadline , which is April 15, 2024. People and businesses in San Diego County who were affected by floods get an automatic disaster relief tax extension, which gives them until June 17, 2024, to file and pay their 2023 taxes [0] State of California Franchise Tax Board . Due Dates . Accessed Mar 18, 2024. View all sources .

Taxpayers who can't file a return on time are given an automatic six-month extension until mid-October. However, if you owe taxes, you'll still need to submit an estimated payment to cover that bill by the regular April tax deadline [0] State of California Franchise Tax Board . Due Dates . Accessed Mar 18, 2024. View all sources .

» MORE: How tax extensions work

Do I have to pay California state tax?

Generally, you have to file a California state tax return if you’re a resident, part-year resident or nonresident and:

You’re required to file a federal tax return.

You got income from a source in California during the tax year.

You have income above certain thresholds [0] State of California Franchise Tax Board . Do I Have to File? . Accessed Mar 18, 2024. View all sources .

» MORE: See what federal tax bracket you’re in

What is California's standard deduction?

The California standard deduction for 2023 tax returns filed in 2024 is $5,363 (single or married filing separately) and $10,726 (married filing jointly, qualifying widow/er or head of household) [0] State of California Franchise Tax Board . Deductions . Accessed Dec 4, 2023. View all sources .

» MORE: Learn about the federal standard deduction and when to take it

What part of my income gets taxed by California?

When it comes to California state tax, there are three residency statuses: resident, part-year resident and nonresident. They determine what portion of your income the state will tax.

» Need help? How to find a tax preparer near you

Am I a resident for California state tax purposes?

Resident status rules.

For tax purposes, you’re a resident of California if your presence in California wasn’t temporary or transitory. Generally, you’re a resident if you lived in California, even if you were temporarily out of state.

Here are some examples of situations that can make you a California resident for tax purposes, according to the state:

You spend more than nine months in California during the tax year.

Your employer assigns you to an office in California for a long or an indefinite period.

You decide to check out California for a while, with no real plans to leave.

You’re in California for an indefinite period to recuperate from an illness.

Students from California who go to college out of state do not automatically become nonresidents. Likewise, attending school in California doesn’t automatically make a student a California resident. The California Franchise Tax Board's website has the rules on how California determines residency status [0] California Franchise Tax Board . 2023 Guidelines for Determining Resident Status . Accessed Jan 17, 2024. View all sources .

Part-year resident status rules

Generally, you’re a part-year resident of California if you were a nonresident for some of the tax year. This is often the case for people who moved to California from another state.

If you’re a part-year resident, you pay California state tax on all income you received during the part of the tax year you were a resident of California, plus state income tax on income just from California sources while you were a nonresident.

Nonresident status rules

Nonresidents may still have to pay California state tax on income they receive from California sources. This means you may need to file a California state tax return even if you live in another state but made money from California-related things such as:

Services performed in California.

Rent from real estate you own in California.

The sale or transfer of real estate in California.

Income from a California business, trade or profession.

In some cases, you might be a nonresident for tax purposes even if you live in California but you were out of state for at least 546 consecutive days because of an employment-related contract.

However, that exception won’t apply if you had more than $200,000 of intangible income while the employment-related contract was in effect, were in California for more than 45 days during the tax year, or if the state thinks the point of your absence is to evade state income taxes [0] State of California Franchise Tax Board . 2023 Guidelines for Determining Resident Status . Accessed Jan 17, 2024. View all sources .

California state tax credits

Tax credits are benefits that decrease taxes owed by the credit amount. Some credits may also be refundable, meaning if the credit amount exceeds the amount you owe in taxes, you might be able to get the overage back in the form of a refund.

Here is an overview of a few popular tax credits available in California for the 2023 tax year (taxes filed in 2024).

California earned income tax credit (CalEITC)

The CalEITC is a tax benefit that mirrors the federal earned income tax credit . Californians with earned income and federal AGI of up to $30,950 in 2023 may be eligible for a tax credit of up to $3,529 [0] State of California Franchise Tax Board . California Earned Income Tax Credit . Accessed Jan 17, 2024. View all sources . The exact credit amount depends on your filing status and the number of qualifying children. (People without kids also qualify.)

California young child tax credit (YCTC)

The refundable young child tax credit is another state-level tax credit modeled after the federal version of the child tax credit . People who qualify for the California earned income tax credit mentioned above and who also had a child younger than 6 by the end of the 2023 tax year are generally eligible for the YCTC. The maximum credit for 2023 is $1,117. The credit begins to phase out for those with an earned income of $25,775 and above and is not available for anyone making above $30,931 [0] State of California Franchise Tax Board . Young Child Tax Credit . Accessed Jan 17, 2024. View all sources .

California child and dependent care tax credit

The state of California also offers a nonrefundable tax credit for people who may have expenses related to the care of a child, a spouse or another type of dependent. Similar to the federal child and dependent care tax credit , eligible taxpayers can claim a certain limited percentage of their expenses on their state tax returns. For more details about who qualifies as a dependent, see the Instructions for Form FTB 3506 on the California Franchise Tax Board’s website [0] State of California Franchise Tax Board . Child and Dependent Care Expenses Credit . Accessed Jan 17, 2024. View all sources .

California adoption cost tax credit

To help offset the costs associated with adoption, California offers a tax credit that can help cover up to 50% of certain adoption-related expenses. The maximum you can claim for the credit is $2,500 per child per tax year, but the remaining amounts can be claimed on tax returns in future years. Typical expenses covered by the credit include travel, unreimbursed medical costs, and other adoptions and agency fees. The child must have been adopted from California [0] State of California Franchise Tax Board . Credit for Child Adoption Costs – Code 197 . Accessed Jan 17, 2024. View all sources .

California nonrefundable renters tax credit

If your income fell below a certain threshold in 2023, you may be able to claim a nonrefundable tax credit for having paid your rent for at least half of the year (six months). Those who are single/married filed separately and made $50,746 or below can qualify for a $60 credit, and those who are head of household, married filing jointly or qualified widow/er with an income at or below $101,492 can qualify for double, at a total of $120 [0] State of California Franchise Tax Board . Nonrefundable Renter’s Credit . Accessed Jan 17, 2024. View all sources .

» MORE: Popular federal income tax breaks to know about

How to track your California state refund

If you've submitted your California state income tax return and are due a refund, there are several ways to keep tabs on the processing of your funds. The California Franchise Tax Board runs its own refund tracking service, similar to the federal "Where's My Refund?" tool. To use the tracker, you'll need to enter your Social Security number, ZIP code, the exact refund amount you're expecting, and your mailing address.

Per the Board, you should expect your California state tax refund about three weeks after e-filing or three months after mailing a paper return. This timeline may be longer if your return is flagged for additional accuracy checks, though.

» Wondering where your CA refund is? You can check the status of your state tax refund online

California's state sales tax rate is 7.25%. Many cities and counties also assess a local tax, which can bump the total sales tax up to 10.75% in some areas [0] California Department of Tax and Fee Administration . California City & County Sales & Use Tax Rates . Accessed Apr 5, 2023. View all sources .

According to the California Tax Service Center, retail sales of physical items are subject to sales tax. Groceries, prescription drugs, and certain items paid for with food stamps are exempt from sales tax [0] California Tax Service Center . What Is Taxable? . Accessed Apr 14, 2023. View all sources .

» Dive deeper: Estimate your California sales tax

5 things to know about California state tax

California’s tax filing deadline generally follows the federal tax deadline .

Tax software will do your state taxes (though sometimes for an extra fee).

If you can’t pay your California state tax bill on time, you can request a one-time, 30-day delay [0] California Franchise Tax Board . Delay your bill payment . Accessed Apr 5, 2023. View all sources .

If you can’t afford your tax bill and you owe less than $25,000, California offers payment plans. Typically, you get three to five years to pay your bill. There’s a fee to set up an agreement [0] California Franchise Tax Board . Payment plans . Accessed Apr 5, 2023. View all sources .

You can also apply for the state’s offer in compromise program, which might allow you to pay less than you owe [0] California Franchise Tax Board . Make an offer on your tax debt . Accessed Apr 5, 2023. View all sources .

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Episode 1 Tax Deductions

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Travel Nursing Tax Guide

Home » Travel Nursing Tax Guide

In this Travel Nursing Tax Guide we will cover: Travel Nurse Tax Deductions such as Tax-Free Stipends and Reimbursements, Tax Homes, Reasons for Taxable Income and Tips to pay less tax and decrease any chance of an audit. This Travel nurse Tax Guide is only a guide. If there are any unanswered questions please consult a Tax Professional.

To read about how former President Trump’s Tax Cut Affects Travel Healthcare Professionals, click here.

Table of Contents

Travel Nursing Tax Deductions

One of the biggest reasons Travel Nurses make more money than staff nurses are Travel Nursing Tax Deductions. The most prominent Travel Nurse Tax Deductions are Tax-Free Stipends for Housing, Meals & Incidentals, Travel Reimbursements and Professional Development Costs. The only condition to qualify for Tax-Free income is that the traveler must be working in a state that is not their tax home.

Travel Nursing Tax Deduction #1: Tax-Free Stipends for Housing , Meals & Incidentals.

It is important to note that this travel nursing tax guide can be used for multiple states. Specifically in California, Tax-Free Stipends can be as much as $1800 per week for housing in San Francisco and $500 per week for Meals and Incidentals, M&IE. Utilizing a tax free stipend is incredibly important within travel nursing taxes.

Travel Nursing Tax Deduction #2: Travel Reimbursements

Make sure you track every travel expense including airfare, gas money and public transportation to and from your travel nursing destination for your travel nursing taxes. Make sure to deduct any travel reimbursements from the travel nursing agency. In 2017 the IRS allows for write-offs at the standard mileage rate of 53.5 cents per mile. For a 1,500 mile trip, you can deduct $802.50

Travel Nurse Tax Deduction #3: Professional Expenses

Next, when filing taxes, you can deduct any of the following professional expenses so long as they’re necessary in maintaining/improving your skills required for nursing.

• Tuition for courses, books, and supplies of schooling necessary for furthering your nursing career.
• If you’re a member of any professional organizations or associations you can write off membership fees or dues.
• Malpractice insurance protects you from personal liability for anything that could happen while on the job
• Dry cleaning expenses for work clothing

What is a Travel Nurse Tax Home and Why do I Need One?

Remember, in order to take advantage of the Travel Nurse Tax Deductions listed above, you need to pay for and maintain, a home/apartment in their declared tax home. A permanent residence and a tax home are not necessarily the same thing. A permanent residence must fulfill two of the following three qualifications in order to qualify as a Tax Home.

• Does the Traveler have significant income at home?
• Does the Traveler have substantial maintenance expenses, like rent or utilities, for their primary residence that are duplicated when on assignment?
• Has the individual left their historical place of lodging and work?

Very rarely do travelers work at home, so most travelers fulfill qualifications two and three.

Some keep PRN work at home and are able to satisfy 1 and 3. The IRS requires travel nurses to have a tax home, else they pay taxes on all of their stipends and reimbursements.

Documents that can help prove the validity of a tax home are:

• Driver’s License
• Car Registration
• Voter Registration

Travel Nurse Tax Home: Which States Have Zero Income Tax

• No Income or Sales Tax
• Relies on estate, excise and gift taxes
• Higher property Taxes
• High sales tax 8%
• Tax gambling industry
• No sales tax except alcohol
• High property tax
• Taxes Alcohol and Tobacco
• Low sales and Property taxes
• High sales and sin tax
• Texas Constitution forbids income tax for good
• High sales and property taxes
• Has never had income tax
• High sales taxes
• No income taxes for personal or corporate
• Low sales and property taxes as well
• Tax fossil fuel industry

Remember, when you go to file your taxes in April, or quarterly, you must pay income taxes in all of the states you worked and your home state. You have to pay in your home state even if you didn’t work there.

Also, if one of the states above is your tax home, you only have to pay income taxes in the states that you work. Now if your home state has a higher income tax than the states your working in, you don’t pay twice. The amount you pay in the state where you’re working will count as a credit towards the overall sum your home tax state requires.

Example A: Your Tax Home is Florida and you also worked in Texas and Washington

No income tax owed.

Example B: Your Tax Home is Florida and you worked in California and North Carolina.

You owe California 6% of income earned in California and North Carolina 5% of income earned in North Carolina. You owe no income taxes in your home state.

Reasons against Travel Nursing Tax-free Stipends

• Overtime Pay

If you’re considering working overtime for the extra money, you should consider asking for a higher taxable. Overtime laws stipulate that overtime pay is at least paid time and a half of all taxable income. A larger taxable income can help you earn more with Overtime Pay.

• Loan opportunities. If you’re applying for a mortgage or a loan, banks do not consider tax free stipends or reimbursements in their accounting procedures. Banks will only look at your taxable income
• Social Security. The check you get when you retire depends on the 35 years of your highest taxable income. Tax-free stipends or reimbursements are not considered for Social Security.
• Chance of Injury. If you get hurt and can’t work you’re entitled to 2/3 of your taxable pay. This rate does not take into account tax-free stipends or reimbursements

Travel Nurse Tax Tips

To finish the Travel Nurse Tax Guide, here are 6 Travel Nurse Tax Tips. If you still have any questions, please check the IRS guide on travel expenses here

•  Keep hard copies of all contracts and paperwork. Make sure you have paperwork proving your start and end dates to prove temporary work
• Maintain a mileage Log and keep all your receipts
• Don’t work in one location for more than 12 months in a 24 Month period. This will demonstrate to the IRS that you’ve abandoned your Tax Home
•  If you rent out your primary residence while traveling, it may impact your eligibility for Tax-Free Stipends
•  Get a regular PRN job in your tax home and if the income is substantial enough you don’t have to prove your financial obligation in the tax home. Criteria 1 and 3
• Just like how the travel nurse tax guide is just a travel nurse tax guide, these Travel Nurse Tax Tips are just Tips. If you have any concerns, do yourself a favor and hire a Tax Professional. By allowing a CPA to file for you, you can very possibly save more money and lessen the risk of an audit

Related Posts:

• Wanderly 2018 Roundup: Our 12 Favorite Blog Posts
• 5 Tips For The Upcoming Tax Season
• The 12 Highest Paying Travel Nursing Cities
• Traveling CNA Jobs And Your Personal Finances
• Benefits of Traveling for Allied Healthcare Professionals
• The Hardest Things About Being a Travel Nurse

Assessment Info

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Visit California works in close coordination with  California's Office of Tourism  — while Visit California conducts marketing programs that drive visitation, the Office of Tourism oversees the assessment program that helps fund these initiatives.

California businesses participating in the Tourism Assessment Program are identified as part of five travel and tourism industry categories:

• Accommodations
• Attractions and Recreation
• Restaurants and Retail
• Transportation and Travel Services
• Passenger Rental Cars

Visit the California Office of Tourism for more details about the program, to find out what qualifies as an assessed business, and to learn how to calculate and file your assessment.

Are Big California Tax Changes Coming Soon?

A controversial ballot initiative could restrict future taxes and tax hikes in the Golden State.

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The upcoming November ballot in California could redefine the state's tax landscape. That’s due to an initiative backed by business groups designed to protect Californians from what proponents describe as an unsustainable state tax regime.

If approved, the Taxpayer Protection and Government Accountability Act could have significant implications for Californians. It would limit future tax increases at state and local levels to curb what proponents see as excessive taxation without sufficient oversight. 

As stated on its promotional website , the measure's primary rationale is that "California cannot sustainably bear the burden of ever-increasing taxes and fees without adequate accountability or transparency."

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Opponents, like California Gov. Gavin Newsom , fear that the measure requiring voter approval of tax increases could negatively impact vital public services and infrastructure funding and water down state legislative power to tax and spend. 

Here’s more of what you need to know.

California tax increases

The Taxpayer Protection and Government Accountability Act, championed by a group sponsored by California homeowners, taxpayers, and business organizations, would require voter approval for any new California taxes or tax increases . Supporters point to the state's fluctuating budget and instances of fiscal mismanagement as reasons why the measure, mandating a two-thirds vote to increase or enact new California taxes, is needed.

“California is becoming too expensive for working families and family businesses. We need to give Californians the final decision on raising their taxes and better accountability for how state and local governments spend their money,” states Robert Rivinius of the Family Business Association of California .

However, the tax measure has its critics. Opponents, including officials from state and local governments and labor unions, have expressed concerns about the potential negative impact on public services, program funding, and infrastructure maintenance. Additionally, Gov. Newsom and legislative leaders have asked the California Supreme Court to remove the initiative from the state ballot.

• A legal basis is that the provision is essentially a revision to the state's constitution that requires legislative approval rather than an amendment that could come through a popular vote. 
• Several organizations, including the ACLU and the California Farm Bureau Federation , and former California Gov. Jerry Brown have filed briefs supporting the removal, arguing that the measure would have an unprecedented impact on the state’s power to tax and spend.

While some in California advocate for higher taxes in exchange for enhanced government services, data show most Californians are concerned about the state’s fiscal issues. California gas prices are among the highest in the United States. The Golden State is also known for high sales and income tax rates. Housing costs and availability of affordable housing in California continue to be significant concerns.

California exit tax

This taxpayer protection initiative controversy comes as other California taxes have made news. 

• As Kiplinger reported, there are questions about whether the state’s new $20 minimum wage for food workers is a way to raise taxes. 
• California recently removed the wage cap on its 1.1% employee payroll tax for State Disability Insurance (SDI). So, the percentage of wages paid to residents on family leave or out of work due to a disability will increase. While the payroll tax is not new, it was previously imposed only on wages up to $145,600. Starting January 1, 2024, those earning more than $145,600 also pay this tax.
• A proposed wealth tax that would have imposed an additional 1.5% on California residents' net worth exceeding $1 billion failed to advance. That proposal included an exit tax that would have applied to some wealthy taxpayers who left California .

Meanwhile, data show taxpayers are fleeing high-tax states , including California, for lower-tax states and states with no income tax, like Florida and Texas. However, California residency and income-sourcing rules are an issue for some. If you are leaving the state, evaluate whether you are considered a resident of California and, for example, whether you have real estate or income that can subject you to California tax, despite your move.

Tax in California: Bottom line

As the November election approaches, Californians could face pivotal decisions that shape the state's fiscal policies for years. So stay tuned. The last time that a tax measure of this magnitude came before California voters was more than 40 years ago when Proposition 13 was on the ballot. (Proposition 13 restricts property tax increases in the state.) 

• California Tax Deadline Extension 2024: What You Need to Know
• California Just Became More Expensive for High Earners
• Is California's Minimum Wage Hike a Way to Increase Taxes?

As the senior tax editor at Kiplinger.com, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist. 

The impact of saving more, spending less later and benefiting from an extra year or more of compounding can be truly staggering.

By Andrew Rosen, CFP®, CEP Published 14 April 24

You may want to splurge, but using your tax refund to save for the future or pay down debt is a much better idea — even if not as fun.

By Kathryn Pomroy Published 14 April 24

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​​​For bargaining units with an existing Memorandum of Understanding (MOU), if the MOU contains travel language that is in conflict with this language, the MOU language shall be controlling with the following exception: ​​​​​​​  the meal and short-term lodging reimbursement rates listed below are applicable to all excluded state employees as well as all rank and file state employees on authorized travel status.

Exe m pt, excluded, and represented state employees may be eligible for the reimbursement of authorized out-of-pocket expenses that are reasonably, actually, and necessarily incurred as a result of conducting state business. In accordance with current state policy, employees may be eligible to receive reimbursement for expenses such as:

• Method of travel (transportation)
• Meals and incidentals
• Short-term lodging
• Out-of-state travel
• Out-of-country travel
• Personal vehicle mileage 
• Other actual and necessary business and/or travel costs incurred while conducting official state business

HR Manual sections 2201 – Travel and Relocation Policy , 2202 – Mileage Reimbursement , and 2203 – Allowances and Travel Reimbursements provide additional information about travel reimbursements, including links to authorities and resources. To learn more about recent and upcoming changes to the travel program, please see CalHR's new  Travel Frequently Asked Questions page .​

Meal and Incidental Rates

The following reimbursement rates for meals and incidentals are maximums, not allowances.  In the event of an audit, employees must be able to produce receipts substantiating the amount claimed.

HR Manual section 2203 – Allowances and Travel Reimbursements provides additional information, including travel timeframes (fractional day of travel, trip of less than 24 hours, trip of more than 24 hours, etc.).

​**As noted in HR Manual section  2203 – Allowances and Travel Reimbursements , receipts are not required to claim meal and incidental expenses up to the maximum allowable reimbursement rates specified above. Receipts for meals must be maintained by the employee as substantiation that the amount claimed was not in excess of the amount of the actual expense. The employing department may request receipts at any time.​​​

Personal Vehicle Mileage Reimbursement Rates

HR Manual section 2202 – Mileage Reimbursement provides additional information, including the following policies: personal vehicle mileage reimbursement, private aircraft mileage reimbursement, and receipts.

Employees must have advance approval to drive a personal vehicle on state business. 

Effective dates for represented employees may be found in the applicable  MOU . 

Claims for travel prior to a new rate's effective date shall receive the prior rate.

For historical mileage reimbursement rates, please review the State Controller's Office's Payroll Procedures Manual, Section N . ​

2023 Personal Vehicle Mileage Reimbursement Rates

*Unless otherwise stated in the applicable MOU, the personal aircraft mileage reimbursement rate is the applicable “Private Aircraft” rate provided in this chart​.​

2024 Personal Vehicle Mileage Reimbursement Rates

​ Mile age reimbursement covers:

• The cost of maintenance (oil, lube, routine maintenance)
• Insurance (liability, damage, comprehensive and collision coverage)
• Licensing and registration
• Depreciation and all other costs associated with operation of the vehicle ​

Short-Term Lodging Reimbursement Rates

​HR Manual sections 2201 – Travel and Relocation Policy and 2203 – Allowances and Travel Reimbursements provide additional travel policy information, including lodging reimbursement policy and the excess lodging request approval process.

• Employees who incur approved overnight lodging expenses may be reimbursed.
• Employees must stay at a commercial lodging establishment catering to short-term travelers, such as a hotel, motel, bed and breakfast, public campground, etc.
• Employees must provide a receipt to claim reimbursement; no reimbursement will be paid without a receipt.  

Should the base room rate exceed the rates noted below, an  Excess Lodging Rate Approval Request (STD 255C) must be submitted and approved by your department and/or CalHR before the trip takes place.

Maximum Lodging Reimbursement Rates per Night

**Effective Dates for Maximum Lodging Reimbursement Rate Through December 31, 2023: ​ BU 1, 3, 4, 11, 14, 15, 17, 20, and 21: 4/1/2017  BU 2: 9/13/2016  BU 5: 8/1/2017  BU 6: 7/3/2018 BU 7: 9/13/2016  BU 8: 4/1/2017  BU 9: 9/13/2016. Exception: effective 7/1/2016, the rate for Alameda, San Mateo, Santa Clara is $140.  BU 10: 10/11/2018  BU 12: 3/15/2017  BU 13: 3/15/2017  BU 16:  5/2/2017  BU 18: 3/15/2017  BU 19: 4/1/2017  Excluded: 7/1/2016 

Planning a road trip this weekend? California gas tax hike will make July 4 travel more expensive

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Californians who plan road trips for the Independence Day holiday can expect to pay more at the pump, as the state gas tax increases this weekend by 4 cents to pay for roads and to adjust for inflation.

The latest increase puts the state gas tax at around 58 cents per gallon.

A decade ago, Californians were paying about 40 cents per gallon for state taxes. The price has gradually gone up over the years.

In the Los Angeles-Long Beach area, the average gas price Friday was $4.89 per gallon for regular fuel, about 3 cents cheaper than it was a week ago, according to the American Automobile Assn. This time last year, the average gas price in the area was $6.33 per gallon.

Experts say that even with the tax increase, gas prices over the holiday weekends are expected to be cheaper than last year.

“Much of Covid’s revenge travel is behind us, and thus far this summer, demand for gasoline has been softer than last year, helping to ease the pressure on gas prices,” Patrick De Haan, head of petroleum analysis at GasBuddy , said in a news release. “Coupled with an economic slowdown and rising interest rates, Americans are feeling a bit more sluggish about hitting the road again this summer, leading to the lower prices.”

AAA predicts that more than 50 million people nationwide will celebrate the Fourth of July weekend by traveling, with about 43.2 million traveling by car.

The Automobile Club of Southern California predicts that travel for the weekend will almost reach the all-time high seen in 2019. More than 3.4 million Southern Californians are expected to travel, which is about 4.4% higher than last year and 1% less than 2019.

“Gas prices are $1.30 per gallon less this year than last, but they are still high compared to historical averages,” Andrew Gross , a AAA spokesperson, said in a news release about national gas prices. “The previous record average high price for gas on July Fourth was $4.10 in 2008, while the low was $1.39 in 2001. Yet despite currently elevated prices, drivers are not cutting back on travel this summer.”

Prices at the pump are expected to continue to decline through next week if gas demand remains low and increasing supply is able to stave off any jumps in price, according to AAA.

More to Read

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April 9, 2024

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March 24, 2024

As EVs gain traction, how will California pay for road repair?

Jan. 12, 2024

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Save on Lodging Taxes in Exempt Locations

In some states and U.S. territories (e.g. Puerto Rico), federal travelers on official business are exempt from paying certain lodging taxes when using a DoD Government Travel Charge Card (GTCC). You can find out if the state where you are traveling is tax exempt on the Per Diem screen in the Defense Travel System (DTS). When making a reservation, just look for a notification under each TDY location and follow the link to GSA Smartpay for any required Tax Exempt Forms prior to your trip. You may also see a Pre-Audit for hotels in locations that require a tax-exempt form.

Keep in mind:

• You must be on official travel and pay with your Government Travel Charge Card . Individual travelers must use their Individually Billed Account (IBA) to qualify for the state sales tax exemption if there is one. Employment with the federal government doesn’t exempt you from lodging tax on personal travel.
• With group bookings for which the hotel payment is a direct bill or through a Centrally Billed Account (CBA), the state sales tax is exempt in all states and territories .
• You may need to fill out a lodging tax exemption form (depending on the state/territory) and present it at check-in . Tax Exempt Forms are available at all DoD Preferred and FedRooms hotels, however, you should check the requirements before you leave on your trip as some forms require a supervisor’s signature.
• Some local taxes may still apply . In some instances, tax exemptions apply only to state taxes and local taxes may still need to be paid.

For more information on state sales tax exemptions, watch the video below or check out answers to frequently asked questions . For tax forms and other resources, visit smartpay.gsa.gov .  

Last Minute Tax Tips: What You Need to Know for April 15 Tax Deadline

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Media Contacts Only

SACRAMENTO - The California Franchise Tax Board (FTB) today reminded taxpayers that April 15 is the deadline for most Californians to file and pay their 2023 taxes to avoid penalties.

FTB provided guidance on tax relief related to natural disasters, claiming tax credits, filing a tax return for free, avoiding scams, and tax payments.

"With Tax Day less than a week away, I want to ensure Californians are aware of free filing services and valuable cash-back credits available to them," said State Controller and FTB Chair Malia M. Cohen. "Millions of taxpayers are expected to qualify for the California Earned Income Tax Credit, and many will also get the Young Child Tax Credit. These credits combined can be worth hundreds or even thousands of dollars to California taxpayers and their families."

Tax Relief for San Diego County Flood Victims

FTB granted tax relief for San Diego County taxpayers impacted by severe storms and flooding that began on January 21, 2024. Individuals and businesses with their principal residence or place of business in San Diego County will have until June 17, 2024, to file certain California individual and business tax returns and make tax payments originally due between January 21, 2024, through June 17, 2024.

Visit FTB's Emergency tax relief page for more information.

Cash-Back Credits: California Earned Income Tax Credit (CalEITC), Young Child Tax Credit (YCTC), Foster Youth Tax Credit (FYTC)

Californians with an income up to $30,950 may qualify for CalEITC , which can provide cash back or lower any tax owed. Those eligible for CalEITC and with a child under the age of six may receive up to $1,117 from YCTC , which, beginning with tax year 2022, does not require income if all other CalEITC and YCTC requirements are met. In addition, those earning less than $63,398 may also qualify for the federal EITC. Between CalEITC, YCTC, and the federal EITC, an eligible family could receive up to $12,076. FYTC provides up to $1,117 for tax year 2023. CalEITC, YCTC, and FYTC are claimed by filing a state tax return.

The federal EITC is claimed on a federal return. For a calculator to estimate your credits, and more visit ftb.ca.gov/caleitc .

File for Free, Free Tax Help and FTB Pay Online Services

Most taxpayers can file their state tax returns electronically and free of charge by using FTB's CalFile program . CalFile and other free or fee-based e-file services are available on FTB's website. FTB recommends taxpayers opt for direct deposit to their bank accounts to ensure a timely and safe refund. E-filing provides faster refunds, increased accuracy, and immediate confirmation that FTB has received a return.

Taxpayers are encouraged to use FTB's electronic payment option, Web Pay . Web Pay allows users to authorize a tax payment from a bank account. Individual taxpayers can use their MyFTB account to schedule payments and securely access and view their tax information.

Free in-person tax preparation is available for low- to moderate-income taxpayers through the Volunteer Income Tax Assistance (VITA) program. Visit FTB's Get free tax help page to find the closest VITA location.

Automatic Tax Filing Extension

California taxpayers get an automatic extension to file until October 15 this year. However, any taxes owed must be deposited or postmarked by April 15, 2024. Taxpayers who are unsure of whether they will owe money can refer to FTB's Tax Calculator .

Beware of Scams

FTB urges taxpayers to protect themselves from scams. Scammers often prey on taxpayers by impersonating IRS or FTB employees. They may attempt to trick taxpayers into sending money not owed or providing personal information that could be used to file fraudulent returns and steal refunds. If you receive a letter from FTB or the IRS that appears suspicious, contact FTB at 800.852.5711 or the IRS at 800.829.1040. Concerned taxpayers can also visit FTB's Notices/letters and the IRS's Understanding your IRS notice or letter pages.

Visit FTB's Scams page for more information on common types of scams.

Help With Tax Payments

FTB encourages taxpayers who cannot pay their tax bill in full to file on time and pay as much as they can as soon as they can to limit penalties and interest. Payment plans are available on the FTB website for taxpayers facing financial hardship. People who owe $25,000 or less and can repay within five years generally qualify.

One-Time Penalty Cancellation Relief

A new law allows FTB to grant individual taxpayers a one-time cancellation of a penalty for filing or paying their taxes late. To receive this relief, taxpayers must comply with all tax return filing requirements, have not previously been granted a one-time abatement, and have no outstanding tax liabilities (other than the timeliness penalty the taxpayer wants cancelled). The relief applies to tax year 2022 forward. For more information, visit FTB's One-Time Penalty Abatement page or call 800.689.4776.

FTB administers two of California's major tax programs: Personal Income Tax and the Corporation Tax. FTB also administers other non tax programs and delinquent debt collection functions, including delinquent vehicle registration debt collections on behalf of the Department of Motor Vehicles, and court's ordered debt. Annually, FTB's tax programs collect more than 70 percent of the state's general fund. For more information on other taxes and fees in California, visit: taxes.ca.gov .

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Helpful Guide: Sales Tax on RV in California (Luxury Tax)

• September 30, 2022 /
• RVing 101 /
• By James V.

Whether you like it or not, there is a tax somewhere in every state. The problem is that these tax assessments are never fair. Even in the state of California, the sales tax is not really that fair. It is just expensive

The amount of sales tax you will pay in California varies from county to county. You can pay as little as 7.25% in one county while paying up to 10.25% in another. It is not a fair system but it is California and taxes are high in this state.

To learn more about paying sales tax in California, just continue to read our article. It has the information you want to know about before you buy your RV or trailer in that state. Watch out for out-of-state registration as well. States are cracking down on it.

What is The Sales Tax On an RV in California?

This will depend on the county you live in. To find the most accurate rate, you should check with your local DMV office or tax office. Rates will change when lawmakers make changes and that can happen at any time.

Currently, if you are living in Los Angeles County you will be assessed 10.25% sales tax on the purchase of your RV. If you happen to live in a county like Ventura, then your sales tax will be lower.

The rate for that and other counties is 7.25%. Other counties will fall between those two figures. What makes this trickier is that you can live in Los Angeles but store your RV in Ventura county or some other low sales tax county.

That storage address will lower your sales tax rate to the 7.25% level. There are ways to lower your sale tax bill but law enforcement is using a Big Brother type of strategy. They are asking residents to rat you out if you drive regularly on California roads with out-of-state plates.

You have to be careful when you try to save money on paying taxes. The government always wants its fair share.

Do You Pay Sales Tax On a Used RV in California?

Yes, you will have to pay sales tax when you buy a used RV in California. The state law requires that all people buying a vehicle in the state must pay sales tax. The going rate for used is about 7.25% but do not quote us on that.

A used RV purchase in Los Angeles county may still cost you that high 10.25%. Make sure to double-check with the tax office to get the exact rate you have to pay in your county. Rates change as do applications of taxes so never take anyone’s word for it.

There are a lot of ideas floating around the internet about how to save on your California state sales tax. You better be careful when thinking about trying any of them. The information may be old and out of date, or laws may have changed.

Since CHP has been instructed to start cracking down on out-of-state registration, it may not be the best idea to go to another state and buy your one or used RV.

The fines could be heavier to pay than the sales tax. Not to mention what it will do to your driver’s license fees and other registration costs on other vehicles.

California Resident Buying RV Out Of State

This is the main alternative most website writers are talking about as the best option to take. They recommend that you buy and register out of state to save on California taxes.

One option is to buy your RV and plan to use it 51% of the time out of state for the first year. This may be done by buying and registering your RV out of state and then staying out of California for at least 51% of the time.

After one year, there is no sales tax payment to make. But like all strategies, double-check on the laws governing this type of move. If you have an out-of-state address already, you can buy in that state and lower your tax obligation.

But you should check with the California Francisco Tax Board website. Laws change so it is best to get the information from the people who create the laws. Don’t rely on second or third-hand information as someone may not be aware of those changes if any have taken place.

As we said, California and other states are cracking down on out-of-state registrations. You may be tagged even if you are out of the state for 51% of the year.

Is There a Property Tax On An RV in California?

As far as we can tell, no there is not any property tax on RVs in this state. Property tax is levied against the permanent property and RVs are not considered permanent property.

While the term mobile home is used to describe many RVs, in California, a mobile home is defined as a manufactured home. That type of temporary home can be permanently placed on land or in a mobile home park.

We have not seen an RV mentioned as property in the way a regular home or manufactured home is referred to. In other words, there should not be any property tax on an RV.

But as we have said continually throughout this article, double-check with your local tax authorities to make sure. It is best to get your information from them as they will be current on all laws pertaining to taxes and RVs.

Be careful when checking the different RV discussion forums. The owners there are not all from California, do not buy or register their RV in that state, or are not current with the laws at this time.

California Luxury Tax on RV

Not that we have seen. The only tax that we have come across is the sales tax plus fees on registration and other fees the state of California dreams up. We have not seen any mention of a luxury tax but that may be a hidden cost somewhere along the line between purchase and registration.

One of the things that complicate a search for this topic is all the nonsense or bad websites that use that title to get people to click on their links. We ran into over 20 such websites all in a row on the first page of results.

Their content is only gibberish but misleads people wasting their time as they provide no legitimate information. Because of this, we will advise that you contact your local tax office or DMV to get the full list of taxes levied against RVs and trailers.

Those government offices will be the best ones to talk to as they will have the current list of taxes you need to be concerned about. You can call them up and talk to them or send them an e-mail through their website, etc.

When it comes to taxes it is best to go to the source.

Is RVs Tax Deductible in California?

There is a possibility to do this. The key is that you are deducting your sales tax only from your regular tax statement. You can also deduct the ad valorem tax which is a tax based on your RV’s value.

The hitch for both of these deductions is that one, they are a one-time only deductions. Two, you must do it in the tax year you made your purchase. You cannot wait 5 years down the road when it is more beneficial for you to make deductions.

If you have a loan on your RV, it may be possible to deduct the interest payments from your taxes. This possibility and the other two deductions are best discussed with your accountant.

There is also a possible business deduction but there are strict rules governing writing your RV off as a business expense. The same goes if you are renting your RV. There are possibilities you can take advantage of when you do this financial move.

The key is to talk to your accountant or tax preparer about the details. They should have all of this information handy when it comes time to fill out your tax forms. Just make sure to keep your receipts, records, and other documents organized, up to date, and so on.

Some Final Words

Paying taxes is never any fun. However, they must be paid even for RVs. The biggest concern you will have will be the sales tax when you buy a new or used RV. Just make the right decisions on where you register your new vehicle or trailer.

Most important, talk to experienced tax people to make sure you get the correct information. Don’t rely on second or third-hand reports. Always double-check to make sure you know what you can or can’t do tax-wise.

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Avoid These 3 Mistakes When Filing Your California Taxes

T ax season is upon us, and Californians have an extra level of tax that they have to pay: California state income tax. Unless you have a really high income (almost $700,000 for a single person), you won't have to pay California's top tax rate of 12.30%. But every California taxpayer needs to watch out for a few big mistakes to avoid on California income tax returns.

Let's look at a few of the biggest California tax mistakes -- and how you can have a more laid-back tax season.

Read more: we researched free tax software and put together a list of the best options here

Mistake No. 1: Assuming you'll get the same federal deductions

If this is your first time filing taxes in California, you might be surprised to discover that so many of the tax breaks you take for granted on your federal return aren't accepted by California. This can cause your California taxable income to be higher than your federal taxable income. In some important ways, the California tax authorities are more strict than the IRS.

Here are a few big differences between federal tax deductions and what California allows.

California has a lower standard deduction

The IRS allows for a much bigger standard deduction than California does. For example, while the federal standard deduction for married couples filing jointly is $27,700 for 2023, in California those couples can only take a standard deduction of $10,726. That's a difference of $16,974!

California doesn't allow deductions for health savings accounts (HSAs)

Putting money into a health savings account (HSA) is one of the best federal tax deductions you can get, because it's an "above the line" deduction and there are no income limits. But your HSA won't save you money on California taxes -- California doesn't allow any deductions for HSA contributions.

California doesn't allow deductions of state, local, or property taxes

If you take itemized deductions on your federal tax return, you're probably familiar with the SALT deduction for up to $10,000 of state and local taxes. This is a favorite tax break for homeowners in higher-tax states because it lets homeowners deduct some (or all) of their property taxes from their federal income.

California doesn't allow this deduction, either. Sorry, but if you have a big, expensive home with high property taxes, you won't get a California state tax break.

California has some special deductions that the feds don't allow

California is not completely ungenerous to taxpayers. There are a few types of tax deductions where California actually offers higher limits and bigger benefits compared to the IRS. For example:

• Home mortgage interest: Californians can deduct interest on mortgages up to $1 million (the federal limit is $750,000).
• Moving expenses: Anyone in California can deduct moving expenses from their state tax return; the Feds only allow some military service members to do this.
• Miscellaneous deductions: If you have to shell out money for certain expenses related to your job, California will let you deduct those costs -- and certain other miscellaneous expenses -- for amounts over 2% of your federal adjusted gross income (AGI).

Note: In California, home mortgage interest and miscellaneous deductions can only be taken if you itemize deductions at the state level.

Mistake No. 2: Trying to get tax credits that you don't qualify for

Another big mistake on California taxes is assuming you qualify for certain tax credits that are limited by income. California offers several unique tax credits for people in various life stages, but unless your income is below a certain level, you cannot get them. Here are a few to note.

• Young Child Tax Credit: You must have a qualifying child under age 6, and your earned income must be $30,931 or less.
• Nonrefundable renter's credit: Your income must be $50,746 or less for single filers, or $101,492 or less for couples filing jointly, or head of household.
• Senior head of household credit: Older adults (age 65) who are recently widowed can get this tax credit, but only if your income is less than $92,719.

Mistake No. 3: Failing to pay taxes owed by April 15, 2024

California is surprisingly laid-back about tax filing deadlines. Everyone in California gets an automatic six-month deadline extension for filing their state taxes -- you don't have to file your 2023 California tax return until Oct. 15, 2024. That's right! You don't need permission, you don't need to fill out any forms; you can just wait until October if you want.

However, if you owe taxes for 2023, if you didn't have enough money withheld from your paycheck, if something has changed in your personal finances that has caused you to owe more money to the state of California than you had expected? You must pay your 2023 California tax bill by April 15, 2024. Paying your taxes in full and on time feels good, and it helps you avoid fees and penalties.

Bottom line

Filing a tax return can be intimidating and stressful, so why not get some help in your corner? Higher-income Californians, small business owners, or people with unusually complicated tax situations might want to hire professional tax help .

But for most everyday Californians who are nowhere near the top tax bracket, the best tax software can help you file your federal and state tax returns easily and cost-effectively. California has some good deductions and credits that you won't want to miss -- tax software can help you make sure you only pay what you owe and get every California tax break you deserve.

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California Franchise Tax: What It Is and How to Manage It

Even if you don’t own a franchise, or a business physically located in California, your business may be required to pay the California Franchise Tax. While the name is a bit confusing, this refers to an annual tax that most businesses in California, as well as some businesses that do business in California, must pay. It starts at $800 and may be higher for some businesses. 

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How Much Is The Franchise Tax In California?

The State of California Franchise Tax Board administers the franchise tax, along with other taxes in California. The amount of the franchise tax depends on the type of business entity that is doing business in California.

Keep in mind that your business entity must be the same at the state and federal level. Your business can’t operate and file federal income taxes with the Internal Revenue Service as an LLC or corporation, but then operate and file taxes as a different type of entity to save money on franchise taxes in California, for example. 

It’s also important to note that for many types of businesses, income that flows through to the individual’s personal income tax return will be taxed at the California State income tax rate. The same thing applies at the federal level. 

In California, the standard deduction for 2023 is $5363 for those who are single or married/Registered Domestic Partner (RDP) filing separately. It is $10,726 for married/RDP filing jointly, head of household, or qualifying widow(er). 

You may be required to make quarterly tax payments, just as you make quarterly estimated tax payments to the IRS. 

What is the California Franchise Tax for LLCs?

Every Limited Liability Company that is doing business or organized in California must pay an annual tax of $800. 

There was a temporary tax break that applies to tax years beginning on or after January 1, 2021, and before January 1, 2024. LLCs that organize, register, or file with the Secretary of State to do business in California during those time frames do not have to pay the annual tax of $800 for their first tax year. 

Additionally, If you cancel your LLC within one year of organizing, you can file Short form cancellation (SOS Form LLC-4/8) with the California Secretary of State and your LLC won’t be responsible for the annual $800 tax for its first tax year.

And here are two more exceptions to the first year tax: A single-member LLC or Limited Liability Partnership (LLP),  does not have to pay the annual tax and fee if both of the following are true:

• It did not conduct any business in California during the tax year and
• Its tax year was 15 days or fewer

If your LLC will make more than $250,000 you’ll have to pay an LLC fee that operates similar to an LLC tax, and you’ll need to make an estimated fee payment by the 15th day of the 6th month (of the current tax year). The fee ranges from $900 for businesses with total California income of $250,000 – $499,999 to $11,790 for businesses with incomes of $5 million. Learn more here . 

An LLC that elects to be taxed as a corporation, it will be taxed at the corporate tax rate (see below). 

What is the California Franchise Tax for Corporations?

Every corporation that is incorporated, registered, or doing business in California must pay the $800 minimum franchise tax. There is an exemption that waives the minimum tax on newly formed corporations in the first year of business. In addition, businesses are exempt if they did not conduct any business in California during the tax year and their tax year was 15 days or fewer.

The business tax rate for corporations (other than banks or financials) in California is 8.84% of net income. The Alternative Minimum Tax (AMT) tax rate is 6.65% for corporations that do not show a profit. 

For S corps (not banks or financials) the tax rate is 1.5% of net income, with a minimum of $800. (First-year net income is still subject to the 1.5% tax rate.)

Beyond those exemptions, though, corporations in California must generally pay the minimum franchise tax of $800 even if they lost money or the business was inactive. 

Read more about corporate tax filing requirements in California here . 

How Do You Calculate California Franchise Tax?

The minimum $800 annual franchise tax is straightforward when it applies. Other taxes such as the S Corporation tax or Corporation tax are more complicated because they are based on net income. Net income refers to income minus tax deductions. 

There are a number of California tax deductions that may reduce your taxable income. Most follow federal tax deductions spelled out by the IRS. 

It’s a good idea to use accounting software to keep up-to-date information about your business income and expenses. You can then use tax preparation software or work with a tax professional, such as a CPA or Enrolled Agent to make sure you file and pay both federal income tax and California state income tax (plus any other taxes you and your business may owe) on time. 

Do I Need To Pay The California Franchise Tax If My Business Is Based Outside Of California?

Perhaps. California considers businesses to be “doing business” if you meet any of the following criteria: 

• Are organized or commercially domiciled in California
• Engage in any transaction for the purpose of financial gain within California
• CA sales exceed $637,252 or comprise 25% of total sales, or
• CA real and tangible personal property exceed $63,726 (either the threshold amount or 25% of total property) or
• CA payroll compensation exceeds $63,726 (either the threshold amount or 25% of total payroll)

Note that companies located outside of California whose only in-state activity is the solicitation of sale of tangible personal property to California customers may be exempt from state tax under Public Law 86-272 . 

An example may be a business that uses a website to sell items to California customers, but reviews, processes, and ships orders from outside the state. (On the other hand, use of Internet cookies on California customers’ computers to gather actionable business intelligence that isn’t for the purpose of facilitating that customer’s order could exceed these protections.) 

There is a detailed discussion of this topic in FTB Publication 1050 . It’s better to be safe than sorry here, so consult your CPA or tax professional to clarify your business obligations. 

How to Stay Compliant with the California Franchise Tax

The best way to stay compliant with the California Franchise Tax is to review the tax requirements and due dates at FTB.CA.GOV. The website is easy to navigate overall. Then be sure to set up accounting software and keep your bookkeeping up to date (or hire someone to do it for you), so you can easily access the tax information needed to comply.

Because California business taxes are relatively high and may be more complicated than in other states, you may want to hire a tax professional to help ensure you don’t miss any important tax filing deadlines. 

Along those lines, it’s also helpful to use a business bank account for all business income, and a business credit card to pay regular business expenses. Separating your business and personal finances makes it a lot easier to stay compliant during tax season. 

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Frequently Asked Questions About the California Franchise Tax

What happens if i don’t pay the california franchise tax.

The California Revenue and Tax Code imposes a number of penalties for taxpayers who fail to comply with tax law. See a full list of penalties here . 

How to Avoid $800 CA LLC Franchise Tax

The choice of entity affects whether you pay this tax. Sole proprietorships and general partnerships pay no annual franchise tax. You may still have to pay taxes, but business income and expenses simply flow through to the owner or partner’s personal tax returns. 

Don’t base your choice of business entity solely on this fee. Forming a California LLC or corporation can provide liability protection, help you save money on federal taxes, and may make it easier for your business to establish business credit and access a wider variety of small business loans . 

In other words, you may save some money by operating as a sole proprietor, but you could pay for it in other ways. Consult with an attorney and/or tax advisor to decide the best business structure for your business. 

How Do I Pay the Franchise Tax?

You can make California franchise tax board payment online using your bank account for free. You can pay online via credit card via ACI Payments (formerly Official Payments) for a fee. You can pay by mailing a check, money order, or cashier’s check, or pay in person at a field office. EFT payments may be used for bank and corporation tax payments.

Do I Pay the Franchise Tax if I Don’t Have a Franchise?

The word “franchise” is often used in conjunction with franchise business opportunities like restaurants or gyms. But in this context the California Franchise Tax covers businesses of many types. So, yes, many businesses located or doing business in California (except sole proprietorships and general partnerships, as mentioned earlier) must pay the annual franchise tax.

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Tax Guide for Purchasers of Vehicles, Vessels, & Aircraft

California sales tax generally applies to the sale of vehicles, vessels, and aircraft in this state from a registered dealer. Use tax applies to the sale of vehicles, vessels, and aircraft purchased from non-dealers (for example, private parties) or from outside California for use in this state. Generally, although the rates are the same, it is the responsibility of the purchaser to report and pay use tax if the seller did not collect an amount for California sales or use tax from the purchaser.

If you purchase a vehicle, vessel, or aircraft from a private party, from an out-of-state seller, or from a California dealer but took delivery outside this state, you may be required to report the use tax directly to the California Department of Tax and Fee Administration (CDTFA). Use tax on the purchase of vehicles, vessels, and aircraft cannot be reported on your California State Income Tax return. To help you better understand the tax obligations for your purchase of a vehicle, vessel, or aircraft, we have created this guide detailing the tax issues and information important for you to comply with the law.

How to Use This Guide

This guide contains tabs with important use tax information for your purchases of Vehicles , Vessels , and Aircraft .

The Resources section provides links to a wealth of information, including forms and publications, statutory and regulatory information, and access to live help from our customer service representatives.

Please note that the information included is general in nature and is not intended to replace any law or regulation.

If You Need Help

If at any time you need assistance with topics included in this guide – or with topics not included – feel free to contact us by telephone or email. Contact information and hours of operation are available in the Resources section.

If you have suggestions for improving this guide, please contact us via email .

You must report your purchase of a vehicle subject to use tax. In general, use tax applies to purchases of vehicles for use in this state when an amount for sales tax is not paid to a California dealer. This includes purchases from out-of-state sellers, private parties, or California dealers when delivery of the vehicle is taken out of state. Unless an exemption or exclusion applies, you must pay use tax on your vehicle purchase. Generally, you will pay the use tax when you register your vehicle with the Department of Motor Vehicles (DMV).

However, if you purchased a vehicle without completing registration and paying the use tax to the DMV, you must pay the use tax directly to the CDTFA. You can report your purchase of a vehicle and pay the use tax by using the CDTFA's online services and selecting the option to File a Return or Claim an Exemption for a Vehicle, Vessel, Aircraft, or Mobile Home under the Limited Access Functions.

Your tax payment is due on or before the last day of the month following the month of purchase.

Penalty and interest charges will begin to accrue once the due date has passed.

Determining the Use Tax Rate

The use tax rate is the same as the sales tax rate and is based on the address where you register your vehicle.

You can look up the current tax rate for your address on our Find a Sales and Use Tax Rate webpage. You may also find a list of current and historical rates on our California City & County Sales & Use Tax Rates webpage.

Determining the Amount Subject to Tax

The total purchase price of your vehicle is subject to tax. The total purchase price includes any type of payment, such as cash, checks, the payment or assumption of a loan or debt, and the fair market value of any property and/or services traded, bartered, or exchanged for the vehicle.

Example #1 You take over monthly payments for a car your friend can no longer afford and, in exchange, your friend transfers his or her interest in the car over to you. You owe use tax on the balance of the loan at the time you assumed the debt, plus any cash you paid for the car. You still owe use tax even if you do not make any cash payment directly to your friend and only assumed the unpaid debt.

Example #2 You purchase a vehicle for $5,000. As payment, you give the seller your current vehicle valued at $3,000 and $2,000 in cash. You owe use tax on the entire $5,000 purchase price.

Example #3 You trade vehicles with another person. No money is involved in the transaction. The vehicle you traded has a current market value of $5,000 at the time of the exchange, which is considered to be your purchase price for your new vehicle. You owe use tax on the $5,000 purchase price.

Example #4 You purchase a vehicle from a private party. The seller knows that you are a painter and offers you the car in exchange for painting his house. You would usually charge $5,000 for this service. You agree to the exchange. You owe use tax on the $5,000 value of the service you performed.

Credit for Tax Paid to Another State

If you paid tax to another state when purchasing your vehicle, you may be entitled to claim a credit for the tax previously paid to another state.

For example, if you previously paid $1,500 sales or use tax to another state for the purchase of the vehicle, and the California use tax due is $2,000, the balance of use tax due to California would be $500.

Incorrect tax amount paid at the DMV

If you believe you were charged and paid the incorrect amount of use tax at the DMV, please contact the CDTFA.

An incorrect tax amount may be collected if the wrong tax rate was charged or if tax was computed on the wrong purchase price. If you overpaid the use tax, you can file a claim for refund using the CDTFA's online services and selecting Claim a Refund for Tax Paid to DMV/FTB under Limited Access Function. Or, you can complete form CDTFA-101-DMV, Claim for Refund or Credit for Tax Paid to DMV , and mail it to the address listed on the form.

If you erroneously reported a lower purchase price than your actual purchase price to the DMV and did not pay enough use tax, you may make an additional payment using the CDTFA's online services and selecting the option to File a Return or Claim an Exemption for a Vehicle, Vessel, Aircraft, or Mobile Home under the Limited Access Functions.

Lease Buyout

If you purchased a vehicle you were leasing at the end of the lease agreement (lease buyout), the purchase is subject to tax.

If a vehicle dealer is not involved in handling the lease buyout for you, the bank or leasing company may not charge or collect the tax on the sale of the leased vehicle (i.e., the lease buyout amount). If that is the case, you will be responsible for paying the use tax at the DMV when you register your vehicle.

However, if you sold the vehicle to a third party and you transferred title and registration to the buyer within 10 days after the date you acquired title from the lessor, the lease buyout is presumed to be a sale for resale and is not subject to tax. Use tax will be due, however, if you make personal use of the vehicle prior to reselling it to a third party. Additionally, use tax is also due if you gift the vehicle, rather than resell it, to a third party.

Claiming an Exemption or Exclusion from the Use Tax

If you claim that your vehicle purchase is exempt or nontaxable, the DMV may ask you to obtain a use tax clearance certificate from the CDTFA before allowing you to register the vehicle without paying tax.

To apply for a use tax clearance certificate (CDTFA-111), use CDTFA's online services and select Request Use Tax Clearance for Registration with DMV/HCD under the Limited Access Functions. Or you may submit form CDTFA-106, Vehicle/Vessel Use Tax Clearance Request , to the CDTFA. You may mail, fax, or submit form CDTFA 106 to your local CDTFA field office or the Consumer Use Tax Section in Sacramento.

To submit your use tax clearance request directly to the Consumer Use Tax Section, please mail it to:

Consumer Use Tax Section, MIC: 37 California Department of Tax & Fee Administration PO Box 942879 Sacramento, CA 94279-0037

In some instances, the DMV may not collect use tax when you register your vehicle because you state that your vehicle was a gift or a family transaction. You may be contacted by the CDTFA at a later time to provide supporting documentation.

Please see publication 52, Vehicles and Vessels: Use Tax for more information regarding obtaining a use tax clearance.

If you receive a vehicle as a gift, you are not required to pay use tax on the vehicle.

To qualify as a gift, the owner must give the vehicle freely, without any payment from the person receiving the vehicle. The vehicle will not be considered a gift if:

• You pay cash, trade property, provide services, or assume a liability in exchange for the vehicle; or
• Your employer gives you the vehicle as a form of compensation (for example, a vehicle was given to you as a bonus).

A signed statement from the former owner indicating the property was given to you as a gift and a copy of the vehicle's certificate of title are needed to support your exemption claim. The statement should include the vehicle's identification number (VIN) or license plate number.

Family Transaction

If you purchase your vehicle from a qualifying family member who is not engaged in the business of selling vehicles, you are not required to pay use tax on the purchase.

A qualifying family member includes a:

• Grandparent
• Spouse or registered domestic partner (as referenced in Family Code section 297.5).
• Brother or sister (related to you by blood or adoption), if the sale occurs when both are minors.

The exemption does not extend to purchases from stepparents or stepchildren if a natural parent or child is not involved or there is not a legal adoption. The exemption also does not apply to transactions between ex-spouses after a decree of divorce.

For example, a purchase from your biological or adopted child would qualify as an exempt family transaction; however, a purchase from your stepchild generally would not.

To qualify for the exemption, you must supply documentation to support the family relationship, such as birth certificates, marriage license, or adoption paperwork, and a copy of the vehicle's certificate of title.

Involuntary Transfers

If you have received a vehicle as the result of an involuntary transfer of ownership, you are not required to pay use tax on the vehicle.

An involuntary transfer is one in which you assume ownership of a vehicle due to circumstances beyond your control.

For example, you acquire a vehicle as the result of a court order, a property settlement in a divorce, an inheritance from an estate, or the repossession of a vehicle you sold.

Documentation needed to support your exemption claim:

• Official court property settlement documents or a certificate of repossession. The documents should include the vehicle's identification number (VIN) or license plate number.
• A copy of the vehicle's certificate of title.

Military Personnel

If you are an active duty service member and your vehicle is brought into California because of an official transfer to this state, you may not owe use tax on the vehicle.

To qualify for the exemption, you must have purchased and taken delivery of the vehicle outside of California before you received your orders to come to this state. Use tax will apply if you take delivery of the vehicle in California or if you purchase the vehicle for use in this state after receiving your official transfer orders.

• Your official military transfer orders.
• A copy of your purchase contract.

Not Purchased for Use in California

If you purchase your vehicle for use outside of California, your purchase may not be subject to use tax.

However, when a vehicle purchased outside of California, is first functionally used outside of California, and is brought into California within 12 months from the date of its purchase, it is presumed that the vehicle was purchased for use in California and is subject to use tax if any of the following occur:

• The vehicle is purchased by a California resident.
• The vehicle is subject to California DMV registration during the first 12 months of ownership.
• If purchased by a nonresident of California, the vehicle is used or stored in California more than one-half of the time during the first 12 months of ownership.

Functional use means use for the purposes for which the vehicle was designed. For example, vehicles designed for personal use are functionally used when merely driven; however, vehicles such as busses or trucks designed for a commercial or other special purpose (e.g., transportation or passengers or property) are not functionally used until used for that purpose.

If the vehicle enters California within 12 months of purchase, you may overcome the presumption that the vehicle was purchased for use in California by providing the following documentation to support your claim:

• A statement signed by the seller verifying the date and location of the vehicle's delivery out of state.
• Evidence of registration with the proper out-of-state authority.
• Copies of your vehicle insurance documents identifying the date insurance coverage began.
• Evidence of tax paid to another state.
• Documentation to show the use and location of the vehicle outside of California, such as receipts for meals, lodging or campgrounds, and fuel for the first 12 months of ownership.
• Credit card/bank statements or cell phone bills supporting the use of the vehicle outside of California.

Additionally, a vehicle purchased out of state and brought into California during the first 12 months of ownership for the exclusive purpose of warranty or repair service is not presumed to have been purchased for use in California if the vehicle is used or stored in the state for that purpose for 30 days or less.

The 30-day period begins when the vehicle enters this state, including any travel to and from the warranty or repair facility, and ends when the vehicle is returned to a point outside the state.

Interstate or Foreign Commerce

If you purchase a vehicle for use in interstate or foreign commerce, your purchase may not be subject to use tax.

To document that use tax does not apply, you must supply documentation to support the following:

• You took delivery of the vehicle outside of California.
• You first functionally used the vehicle outside of California.
• One-half or more of the miles traveled by your vehicle must be commercial miles traveled in interstate or foreign commerce during the six-month period immediately following the vehicle's first entry into California.

Functional use means use for the purposes for which the vehicle was designed. For a commercial truck or trailer, first functional use occurs when the vehicle first hauls cargo or is first dispatched to pick up a specific load of cargo.

• A statement signed by the seller verifying the vehicle was delivered to you outside of California.
• A load confirmation, bill of lading, or other similar document verifying the vehicle was first functionally used outside of California.
• Bills of lading and driver logs, fuel receipts, and other similar documents verifying the location and use of your vehicle and the origin and destination of each load from the date of out-of-state delivery until the vehicle first entered California and for the next six months.

Note: In order to ensure you have adequate documentation to support your exemption claim, motor carriers and drivers who are required to use electronic logging devices should retain copies of these records for a minimum of eight years. The CDTFA may have up to eight years to determine whether your truck or trailer was actually purchased for use in interstate or foreign commerce.

Additionally, if you purchased a truck or trailer without completing registration and paying the use tax to the California Department of Motor Vehicles (DMV), you still need to report your purchase to the CDTFA and file a CDTFA-401-CUTS , Combined State and Local Consumer Use Tax Return for Vehicle . You do not need to wait until the end of the six-month test period to register with the CDTFA. Please visit our website to register today, and we will contact you at the end of the six-month test period to request documentation to support your exemption claim.

Sales and Use Tax Exemption Requirements for Trucks and Trailers Used Exclusively in Interstate or Foreign Commerce

Beginning January 1, 2020, Assembly Bill 321 (Stats. 2019, ch. 226), amends the sales and use tax exemption for trailers and semitrailers provided by Revenue and Taxation Code (R&TC) section 6388.5 to also apply to certain new, used, or remanufactured trucks. The exemption applies to trucks delivered to both California residents and non-residents in California that are removed from the state within a specified time, and thereafter used exclusively out-of-state or in interstate or foreign commerce. The expanded sales and use tax exemption is operative from January 1, 2020, through December 31, 2023.

For more information on the new requirements, please see Special Notice, Assembly Bill 321 Expands Sales and Use Tax Exemption to Include Trucks Used Out-of-State or in Interstate or Foreign Commerce .

Purchased by an American Indian for Use on a Reservation

If you are an American Indian who resides on a reservation, your vehicle purchase may qualify as exempt from use tax.

To qualify for the exemption, you must supply documentation to support the following:

• Ownership transferred on the reservation.
• You took delivery of the vehicle on the reservation.
• You used your vehicle on a reservation more than one-half of the time during the first 12 months of ownership.
• A purchase invoice showing the date you took title of the vehicle and showing the date and place the vehicle was delivered to you.
• Documentation showing you are an American Indian residing on a reservation, such as a proof-of-residency letter from your Tribal Council, your tribal ID card, or a letter from the U.S. Department of the Interior.

Farm Equipment

You may be eligible for a partial tax exemption if you purchase a vehicle that will be used exclusively in producing and harvesting agricultural products.

The partial exemption applies only to the state general and fiscal recovery funds portion of the sales and use tax, currently 5.00 percent.

To calculate the tax rate for a qualifying purchase, subtract 5.00 percent from the tax rate that would normally apply at the location where the vehicle is registered. For example, if the current tax rate in effect is 9 percent, the tax rate for a qualifying purchase would be 4.00 percent.

Note: The state rate portion of the sales and use tax is subject to change. The rates used in this example are for demonstrative purposes only. You must use the rate in effect at the time of the sale. Current tax rates can be found on our website.

Three requirements must generally be met for the partial exemption to apply to the purchase of a vehicle. The vehicle must be:

• Purchased for use by a qualified person.
• Used exclusively (100 percent of the time) in producing and harvesting agricultural products.
• Qualifying farm equipment and machinery. For a vehicle to be considered farm equipment and machinery, it must be designated as an implement of husbandry under the California Vehicle Code. Appendix A to Regulation 1533.1, Farm Equipment and Machinery, lists vehicles which are typically regarded as farm equipment and machinery.

If any of these three requirements are not met, the partial exemption does not apply.

Generally, the term implement of husbandry does not include a vehicle primarily designed to transport people or property on a public street or highway, such as a passenger car or truck.

Documentation needed to support your partial exemption claim:

• A copy of your most recent federal or state income tax return with Schedule F, Profit or Loss from Farming .
• DMV registration or identification slip showing the DMV has determined the vehicle to be an implement of husbandry.
• A copy of the bill of sale or purchase contract.

For more detailed information about farm equipment and machinery, see Regulation 1533.1, Farm Equipment and Machinery , and publication 66, Agricultural Industry .

Purchases for Use Outside of California

You may not be required to pay California use tax if the only use of the vehicle in California is to remove it from the state and it will be used solely thereafter outside this state, and you do not register the vehicle in California with the DMV.

This exclusion only applies to a purchase that would otherwise be subject to use tax. This exclusion does not apply to a purchase from a licensed vehicle dealer subject to sales tax.

For example, you purchase a vehicle from a person (private party) in California who does not hold a dealer's license or a California seller's permit. Generally, use tax would be collected by the DMV at the time the vehicle is registered. However, use tax is not required if the only use of the vehicle in California is to remove it from the state and it will be used solely thereafter outside this state. A One-Trip Permit may be issued by the DMV in lieu of registration, for operating certain vehicles while being moved or operated for one continuous trip from a place within this state to another place outside this state.

Use Tax Verification for Other States

If you have moved out of California, and you need to register your vehicle in a different state, you may be asked to provide verification of the tax you paid to the State of California.

The CDTFA can provide you verification of tax previously paid on your vehicle. To submit a request for verification, use CDTFA's online services and select Verify a Sales and Use Tax Payment .

You must report your purchase of a vessel subject to use tax. In general, use tax applies to purchases of vessels for use in this state when an amount for sales tax is not paid to a California dealer. This includes purchases from out-of-state sellers, private parties, or California dealers when delivery of the vessel is taken out of state. Unless an exemption or exclusion applies, you must pay use tax on your vessel purchase. How you report your purchase and pay the use tax on your vessel purchase depends on whether the vessel is a "documented vessel" or an "undocumented vessel."

Documented Vessel

The term "documented vessel" means a vessel which is required to be documented with the United States Coast Guard (USCG) and for which the USCG has issued a valid marine certificate. As a general matter, a vessel is required to be documented with the USCG if:

• It will be used in international waters (outside the 3-mile limit); or
• The vessel is a commercial vessel of at least 5 net tons displacement (typically 28.5' in length).

Pleasure vessels meeting the above size requirement may be documented at the owner's option.

If you owe use tax on your purchase of a documented vessel, you must pay the use tax directly to the CDTFA (see heading below, Reporting the Use Tax on Documented Vessels ).

Undocumented Vessel

A vessel which is not required to be documented with the USCG, and which does not have a valid marine certificate issued by the USCG, is an undocumented vessel. Undocumented vessels are generally required to be registered with the DMV. If you owe use tax on your purchase of an undocumented vessel, you generally must pay the use tax to the DMV when you register the vessel (see heading below, Reporting the Use Tax on Purchases of Undocumented Vessels ).

Reporting Use Tax on Purchases of Documented Vessels

You must report your purchase of a documented vessel and pay the use tax directly to the CDTFA.

You can report your purchase of a documented vessel and pay the use tax by using the CDTFA's online services and selecting the option to File a Return or Claim an Exemption for a Vehicle, Vessel, Aircraft, or Mobile Home under Limited Access Functions.

Your tax payment is due on or before the last day of:

• The month following the month you were contacted by the CDTFA, or
• The twelfth month following the month in which you purchased the vessel, whichever period expires first.

Reporting Use Tax on Purchases of Undocumented Vessels

Generally, the DMV will collect any use tax due on behalf of the CDTFA when you register your undocumented vessel.

You do not need to file a use tax return with the CDTFA if you registered your undocumented vessel with, and paid the use tax directly to, the DMV. However, if you purchased an undocumented vessel without completing registration with DMV, any use tax due on your purchase must be paid directly to the CDTFA. You can report your purchase of an undocumented vessel and pay the use tax by using the CDTFA's online services and selecting the option to File a Return or Claim an Exemption for a Vehicle, Vessel, Aircraft, or Mobile Home under the Limited Access Functions.

The use tax rate is the same as the sales tax rate and is based upon where you principally moor or berth a documented vessel or the address where you register your undocumented vessel.

For example, if you live in Anaheim, California, but moor your documented vessel in Long Beach, California, you must pay tax at the rate charged in the city of Long Beach.

You can look up the current tax rate by address on our Find a Sales and Use Tax Rate webpage. You may also find a list of current and historical rates on our California City & County Sales & Use Tax Rates webpage.

The total purchase price of your vessel is subject to tax. The total purchase price includes any type of payment, such as cash, checks, the payment or assumption of a loan or debt, and the fair market value of any property and/or services traded, bartered, or exchanged for the vessel.

For example, if you purchase a vessel for $50,000 and give the seller your current vessel valued at $30,000, and $20,000 in cash, you owe tax on the entire $50,000 purchase price.

If you paid tax to another state when purchasing your vessel, you may be entitled to claim a credit for the tax previously paid to another state.

For example, if you previously paid $1,500 sales or use tax to another state for the purchase of the vessel, and the California use tax due is $2,000, the balance of the use tax due to California would be $500.

Dealer vs. Broker Purchase

In general, if you purchase your vessel from a dealer who has a California seller's permit, the dealer is responsible for paying the sales tax to the CDTFA, unless the dealer is acting as a broker. However, if you purchase your vessel through a broker, the broker may, but is not required to, collect and report the tax to the CDTFA. If the broker does not collect any amount for sales or use tax, you are required to report and pay the use tax to the CDTFA.

A broker is a person who arranges transactions between buyers and sellers, and who does not have the power or authority to transfer title of the vessel to the purchaser. A broker is not considered the retailer, and therefore is not responsible for the payment of tax. If the broker collects and reports the correct amount of tax to the CDTFA, you have no additional liability. However, if the CDTFA determines that an insufficient amount of tax was collected and reported, you will be billed for the additional tax. For example, if the broker incorrectly collects tax based on an 8 percent tax rate when the applicable tax rate was really 9 percent, you will be billed for the additional remaining tax due.

If the broker collects an amount for sales or use tax but fails to report it to the CDTFA, you will be credited for the amount of tax paid to the broker provided you have a receipt from the broker showing the amount of tax paid to the broker.

If you claim that your vessel purchase is exempt or nontaxable, you must submit documentation to the CDTFA to support your claim.

You can report your purchase of a documented vessel and claim an exemption or exclusion using the CDTFA's online services and selecting the option to File a Return or Claim an Exemption for a Vehicle, Vessel, Aircraft, or Mobile Home under the Limited Access Functions.

Many tax exemptions and exclusions for vessel purchases have a test period of 6 to 12 months. If the applicable test period has not elapsed before the due date of your use tax payment, we recommend that you submit copies of documentation currently available. You may submit the remaining required documentation after your test period has expired. (See the below exemptions and exclusions for information on what documentation is needed to support your claim.)

The process for claiming an exemption for an undocumented vessel is the same as for a vehicle. Please see our Vehicle section, Claiming an Exemption from the Use Tax , for more information.

If you purchase your vessel for use outside of California, your purchase may not be subject to use tax.

However, when a vessel purchased outside of California, is first functionally used outside of California, and is brought into California within 12 months from the date of its purchase, it is presumed that the vessel was purchased for use in California and is subject to use tax if any of the following occur:

• The vessel is purchased by a California resident.
• The vessel is subject to property tax in California during the first 12 months of ownership.
• If purchased by a nonresident of California, the vessel is used or stored in California more than one-half of the time during the first 12 months of ownership.

If the vessel enters California within the first 12 months of purchase, you may overcome the presumption that the vessel was purchased for use in California by providing the following documentation to support your claim:

• A copy of your purchase agreement.
• A statement signed by the seller verifying the date and location of the vessel's delivery out of state.
• Documentation showing the location and use of the vessel between the date of sale and date of delivery, if different.
• A copy of the insurance policy which indicates the navigational limits of the vessel.
• Slip rental/mooring receipts, repair invoices, maintenance receipts, and fuel receipts from the date of out-of-state delivery and for the next 12 months. These documents should identify the vessel by name or documentation number.
• Foreign port of entry documents, if applicable.
• Credit card/bank statements supporting the location and use of the vessel from the date of out-of-state delivery and for the next 12 months.

*Pursuant to Article 3, Section 2 of the California Constitution, California's territorial boundaries extend three nautical miles beyond the outermost islands, reefs, and rocks of this state and include all waters between those islands and the coast.

Additionally, use tax does not apply to the purchase of a vessel brought into this state within the first 12 months of ownership exclusively for the purposes of repair, retrofit, or modification. Any repair, retrofit, or modification to a vessel must be done by a licensed repair facility . Therefore, the exclusion is inapplicable when a vessel that enters California during the first 12 months of ownership for the purpose of repair, retrofit, or modification performed by any person other than a licensed repair facility.

**For purposes of this exclusion, a licensed repair facility must hold an appropriate permit issued by the CDTFA and must be licensed to do business by the city, county, or city and county in which it is located if the city, county, or city and county so requires.

If you purchase your vessel from a qualifying family member who is not engaged in the business of selling vessels, you are not required to pay use tax on the vessel purchase.

To qualify for the exemption, you must supply documentation to support the family relationship, such as birth certificates, marriage license, and/or adoption paperwork.

Commercial Deep Sea Fishing

If you purchase your vessel for use in commercial deep sea fishing, your purchase may be exempt from use tax.

• The vessel was principally used in commercial deep sea fishing outside the three mile territorial waters of California during the first 12 consecutive months after the first operational use of the vessel, and
• You are a person who is regularly engaged in commercial deep sea fishing.

Generally, if your gross receipts from commercial deep sea fishing activities are less than $20,000, it is presumed that you are not regularly engaged in commercial deep sea fishing.

• 12 months of Commercial Fish Receipts identifying the species and location caught.
• Vessel logs showing GPS readings and engine hours.
• A copy of your income tax return(s), including profit and loss statements.
• Copies of California Department of Fish and Wildlife fishing licenses and boat registration.
• Photographs of the entire vessel showing rigging.

You may not be required to pay California use tax if the only use of the vessel in California is to remove it from the state and it will be used solely thereafter outside this state.

This exclusion only applies to a purchase that would otherwise be subject to use tax. No use of the vessel, other than to remove it from the state, can be made. This exclusion does not apply to a purchase from a vessel dealer subject to sales tax.

For example, you purchase a vessel from a person (private party) in San Diego who does not hold a dealer's license or a California seller's permit and immediately leave for your vacation home in Astoria, Oregon. Along the way, you stop at Marina Del Rey, have dinner, and have a boat decal added. The next day you fish in the Channel Islands. Later, you stop and visit friends in San Francisco and take them for a ride on your boat. The exclusion from use tax does not apply because you did not simply remove the boat from the state.

Delays for emergency repairs made to the vessel must be verified as functionally necessary for the vessel to continue its departure from the state. You must provide supporting documentation such as fuel, repair, mooring, and/or lodging receipts to verify the property's departure from California, plus documentation showing that the vessel did not return during the applicable test period.

Bareboat Charters and Rentals

If you purchase a vessel with the intent to limit its use to bareboat charters and leasing, you may be able to report tax based on the fair rental value of the vessel rather than the purchase price.

Vessels 30 feet or more in length are considered mobile transportation equipment (MTE). As the lessor of MTE, you are responsible for the use tax due. If you are leasing your vessel and it is considered MTE, you must report tax based upon the purchase price unless:

• The purchaser's use of the vessel will be limited to leasing the vessel; and
• You make a timely election to report tax based on the fair rental value (i.e. the rental payments that are required by the lease).

To be considered a lease, you must give up possession and control of the vessel to the lessee. If you require the lessee to obtain your services to operate the vessel (i.e. you do not allow your customers to pilot your boat and instead require them to hire your own crew and Captain), the transaction is not a lease for sales and use tax purposes and tax must be paid on the purchase price of the vessel.

To be considered timely, if you purchased the vessel without paying tax at the time of purchase, then an election to pay the use tax based on the fair rental value of the vessel must be made:

• On or before the due date of a return for either the period in which the vessel is first leased, or
• If the vessel is purchased out of state, the reporting period in which the vessel first entered California, whichever is later.

This election cannot be changed, and if the election is not made timely, then tax must be paid based upon the purchase price of the vessel. If you elect to pay tax based on the fair rental value of the vessel and later make personal use of the vessel, then tax will be based upon the purchase price.

For more information regarding leases of MTE, see Regulation 1661, Leases of Mobile Transportation Equipment .

Vessels less than 30 feet in length are not MTE. If you lease a vessel less than 30 feet in length, as the lessor, you are responsible for collecting tax at the time rentals are paid by the lessee, providing the lessee with a receipt, and paying the tax directly to the CDTFA. Tax is not due based on rental receipts only under the following conditions:

• You paid sales tax at the time you purchased the vessel, or
• You made a *timely election to report and pay use tax measured by the purchase price.

In addition, the vessel must be leased in substantially the same form as acquired.

*To be considered timely, use tax measured by the purchase price must be reported and paid timely with a return of the lessor for the period during which the property was first leased.

Personal Property Tax

In addition to sales or use tax, personal property tax may be due.

Please contact your local county assessor's office for more information.

You must report your purchase of an aircraft subject to use tax to the CDTFA. In general, use tax applies to purchases of aircraft for use in this state when an amount for sales tax is not paid to a California dealer. This includes purchases from out-of-state sellers, private parties, or California dealers when delivery of the aircraft is taken out of state. Unless an exemption or exclusion applies, you must pay use tax on your aircraft purchase directly to the CDTFA.

You can report your purchase of an aircraft and pay the use tax by using the CDTFA's online services system and selecting the option to File a Return or Claim an Exemption for a Vehicle, Vessel, Aircraft, or Mobile Home under Limited Access Functions.

• The twelfth month following the month in which you purchased the aircraft, whichever period expires first.

The use tax rate is the same as the sales tax rate and is based on where you principally hangar the aircraft.

For example, if you live in Anaheim, California, but keep your aircraft in Long Beach, California, you must pay tax at the rate charged in the city of Long Beach.

You can look up the current rate by address on our Find a Sales and Use Tax Rate webpage. You may also find a list of current and historical rates on our California City & County Sales & Use Tax Rates webpage.

The total purchase price of your aircraft is subject to tax. The total purchase price includes any type of payment, such as cash, checks, the payment or assumption of a loan or debt, and the fair market value of any property and/or services traded, bartered, or exchanged for the aircraft.

For example, if you purchase an aircraft for $50,000 and give the seller your current aircraft valued at $30,000, and $20,000 in cash, you owe tax on the entire $50,000 purchase price.

If you paid tax to another state when purchasing your aircraft, you may be entitled to claim a credit for the tax previously paid to another state.

For example, if you previously paid $15,000 sales or use tax to another state for the purchase of the aircraft and the California use tax due is $20,000, the balance of use tax due to California would be $5,000.

In general, if you purchase your aircraft from a dealer who has a California seller's permit, the dealer is responsible for paying the sales tax to the CDTFA, unless the dealer is acting as a broker. However, if you purchase your aircraft through a broker, the broker may, but is not required to, collect and report tax to the CDTFA. If the broker does not collect any amount for sales or use tax from you, you are required to report and pay use tax to the CDTFA.

A broker is a person who arranges transactions between buyers and sellers, and who does not have the power or authority to transfer title of the aircraft to the purchaser. A broker is not considered the retailer and, therefore, is not responsible for the payment of tax. If the broker collects and reports the correct amount of tax to CDTFA, you have no additional liability. However, if the CDTFA determines that an insufficient amount of tax was collected and reported, you will be billed for additional tax. For example, if the broker incorrectly collects tax based on an 8 percent tax rate when the applicable tax rate is really 9 percent, you will be billed for the additional tax remaining due.

If the broker collects an amount for sales or use tax but fails to report it to the CDTFA, you will be credited for the amount of tax paid to the broker provided you have a receipt from the broker showing the amount of tax paid to that broker.

If you claim that your aircraft purchase is exempt or nontaxable, you must submit documentation to the CDTFA to support your claim.

You can report your purchase of an aircraft and claim an exemption or exclusion using the CDTFA's online services system and selecting the option to File a Return or Claim an Exemption for a Vehicle, Vessel, Aircraft, or Mobile Home .

Many tax exemptions and exclusions for aircraft purchases have a test period of 6 to 12 months. If the applicable test period has not lapsed before the due date of your use tax payment, we recommend that you submit copies of documentation currently available. You may submit the remaining required documentation after your test period has expired. (See the below exemptions and exclusions for information on what documentation is needed to support your claim.)

If you purchase your aircraft for use outside of California, your purchase may not be subject to use tax.

However, when an aircraft purchased outside of California, is first functionally used outside of California, and is brought into California within 12 months from the date of its purchase, it is presumed that the aircraft was purchased for use in California and is subject to use tax if any of the following occur:

• The aircraft is purchased by a California resident.
• The aircraft is subject to property tax in California during the first 12 months of ownership.
• If purchased by a nonresident of California, the aircraft is used or stored in California more than one-half of the time during the first 12 months of ownership.

If the aircraft enters California within 12 months of purchase, you may overcome the presumption that the aircraft was purchased for use in California by providing the following documentation to support your claim:

• A statement signed by the seller verifying the date and location of the aircraft's delivery out of state.
• Flight logs from the date of purchase until the date of delivery and for the next 12 months.
• Aircraft or engine maintenance logs showing the total engine hours recorded since the date of purchase.
• A copy of the insurance policy for the aircraft.
• Tie-down, hangar rental, fuel, repair invoices, and maintenance receipts from the date of delivery and for the next 12 months. These documents should identify the aircraft by tail or serial number.
• Credit card/bank statements supporting the location and use of the aircraft from the date of out-of-state delivery and for the next 12 months.

Additionally, use tax does not apply to the purchase of an aircraft brought into this state within the first 12 months of ownership exclusively for the purposes of repair, retrofit, or modification. Any repair, retrofit, or modification to an aircraft must be done by a repair station certified by the Federal Aviation Administration or a manufacturer's maintenance facility. Therefore, the exclusion is inapplicable when an aircraft that enters California during the first 12 months of ownership for the purposes of repair, retrofit, or modification performed by any person other than a repair station certified by the Federal Aviation Administration or a manufacturer's maintenance facility.

*For purposes of this exclusion, a licensed repair facility must hold an appropriate permit issued by the CDTFA and must be licensed to do business by the city, county, or city and county in which it is located if the city, county, or city and county so requires.

If you purchase your aircraft from a qualifying family member who is not engaged in the business of selling aircraft, you are not required to pay use tax on the purchase.

Common Carrier

If you purchase your aircraft for use as a common carrier of persons or property, your purchase may qualify as exempt from tax.

To qualify, you must use the aircraft as a common carrier for more than 50 percent of the operational use during the first 12 consecutive months beginning with first operational use. Generally, if your yearly gross receipts from common carrier operations do not exceed 20 percent of the purchase price of the aircraft or $50,000, whichever is less, it is presumed that you are not using the aircraft as a common carrier.

• Copies of the operator's FAA certification.
• FAA registration documents.
• A list of the operator's certified pilots.
• A complete copy of the insurance policy.
• A complete copy of the aircraft flight logs from the date of delivery and for the next 12 months of operational use. (Note: Copies of actual flight logs are required.Computer print-outs are not acceptable.)
• A summary that describes each flight during the first 12 months of operation.
• A complete copy of the aircraft or engine maintenance logs.
• A complete copy of the sales contract which verifies the purchase price, purchase date, and delivery date and location of the aircraft.
• A complete copy of the lease agreement if the aircraft is leased.
• A copy of all lease payment invoices made to the lessor (owner) by the lessee (operator).
• Copies of the operator's customer revenue billings showing the amount charged on all charter flights.

If you purchase an aircraft for use in interstate or foreign commerce, your purchase may not be subject to use tax.

• You took delivery of the aircraft outside of California.
• You first functionally used the aircraft outside of California.
• One half or more the flight time traveled by the aircraft during the six month period immediately following the aircraft's initial entry into California must be commercial flight time traveled in interstate or foreign commerce. The term “commercial” applies to business use and excludes personal use.

Documentation needed to support your claim:

• Flight logs from the date of purchase until the date the aircraft initially entered California and for the following six months. The logs should demonstrate that itineraries and hours are carried forward to each successive flight entry.
• A flight log summary that describes the business purpose of each flight claimed as interstate or foreign commerce.
• Documentation to support the business purpose of each flight claimed as interstate or foreign commerce. This documentation may include, but is not limited to, meeting minutes, signed affidavits from third parties, or email correspondence regarding business trips.
• Copies of maintenance logs and repair invoices verifying the aircraft's total air time at various dates throughout the exemption period.
• A copy of your federal income tax return for the applicable test period showing depreciation of the aircraft as a business asset.

You may be eligible for a partial tax exemption if you purchase an aircraft that will be used primarily in producing and harvesting agricultural products (that is, used for the dusting, spraying, fertilizing, or seeding of crops).

To calculate the tax rate for a qualifying purchase, subtract 5.00 percent from the tax rate that would normally apply at the location where the aircraft is principally hangared. For example, if the current tax rate in effect is 9 percent, the tax rate for a qualifying purchase would be 4.00 percent.

Three requirements must be met for the partial exemption to apply. The item must be:

• Used primarily (50 percent or more of the time) in producing and harvesting agricultural products.
• Qualifying farm equipment and machinery.

For more detailed information about farm equipment and machinery, see Regulation 1533.1, Farm Equipment and Machinery and publication 66, Agricultural Industry .

• FAA registration verifying the aircraft is classified for agricultural use.

You may not be required to pay California use tax if the only use of the aircraft in California is to remove it from the state and it will be used solely thereafter outside this state.

This exclusion only applies to a purchase that would otherwise be subject to use tax. No use of the aircraft, other than to remove it from the state, can be made. This exclusion does not apply to a purchase from an aircraft dealer subject to sales tax.

Delays for emergency repairs made to the aircraft must be verified as functionally necessary for the aircraft to continue its departure from the state. You must provide supporting documentation such as fuel, repair, hangar, and/or lodging receipts to verify the property's departure from California, plus documentation showing that the aircraft did not return during the applicable test period.

Need to know more? Follow the links below for more information about the topics covered in this guide, as well as other information you might find helpful:

• CDTFA-101, Claim for Refund or Credit
• CDTFA-101-DMV, Claim for Refund or Credit for Tax Paid to DMV
• CDTFA-106, Vehicle/Vessel Use Tax Clearance Request
• CDTFA-392, Power of Attorney
• CDTFA-401-CUTS, Combined State and Local Use Tax Return for Vehicle, Mobile home, Vessel, or Aircraft
• CDTFA-416, Petition for Redetermination (Appeal)

Publications

• Publication 17, Appeals Procedures
• Publication 40, Watercraft Industry
• Publication 52, Vehicles and Vessels: Use Tax
• Publication 61, Sales and Use Taxes: Tax Expenditures
• Publication 66, Agricultural Industry
• Publication 79, Documented Vessels and California Tax
• Publication 79a, Aircraft and California Tax

Laws and Regulations

• Regulation 1533.1, Farm Equipment and Machinery
• Regulation 1593, Aircraft and Aircraft Parts
• Regulation 1594, Watercraft
• Regulation 1595, Occasional Sales—Sales of a Business—Business Reorganization
• Regulation 1610, Vehicles, Vessels, and Aircraft
• Regulation 1616, Federal Areas
• Regulation 1620, Interstate and Foreign Commerce
• Regulation 1620.1, Sales of Certain Vehicles and Trailers for Use in Interstate or Out-of-State Commerce
• Regulation 1654, Barter, Exchange, "Trade-Ins" and Foreign Currency Transaction
• Regulation 1655, Returns, Defects and Replacements
• Regulation 1660, Leases of Tangible Personal Property—In General
• Regulation 1661, Leases of Mobile Transportation Equipment
• Regulation 1669, Demonstration, Display and Use of Property Held for Resale—General
• Regulation 1669.5, Demonstration, Display and Use of Property Held for Resale—Vehicles
• Regulation 1684, Collection of Use Tax by Retailers
• Regulation 1685, Payment of Use Tax by Purchasers

Other Helpful Resources

• Contact Us – A listing of CDTFA contacts for your questions and concerns.
• Sign Up for CDTFA Updates – Subscribe to our email lists and receive the latest news, newsletters, tax and fee updates, public meeting agendas, and other announcements.
• Videos and How-To Guides – These resources will help you avoid common mistakes, file your tax returns online, and more.
• City and County Tax Rates – A listing of current and historical tax rates.
• Find a Sales and Use Tax Rate – Find your tax rate by address.
• Special Notices – CDTFA special notices are issued whenever there is a change in law, tax rates, or CDTFA procedures.
• CDTFA Online Services – Learn about the online services CDTFA offers.
• Verify a Permit or License – You can use this application to verify a seller's permit, Cigarette and Tobacco product retailer license, eWaste account, or Underground Storage Tank Maintenance Fee Account.
• CDTFA Field Offices – A comprehensive listing of all CDTFA field offices and contact information.
• Get It In Writing! – The Sales and Use Tax Law can be complex, and you are encouraged to put your tax questions in writing.
• Taxpayers' Rights Advocate (TRA) – The TRA Office helps taxpayers when they are unable to resolve a matter through normal channels, when they want information regarding procedures relating to a particular set of circumstances, or when there are apparent rights violations.
• County Assessors – A listing of County Assessor contacts for your questions and concerns regarding personal property tax.
• California Department of Motor Vehicles (DMV) – Learn about registration requirements for vehicles and locate your local DMV office.
• Federal Aviation Administration (FAA) – Learn about aircraft registration requirements and regulations.
• United States Coast Guard (USCG) – Learn about vessel documentation requirements.
• California Department of Housing and Community Development – Learn about registration requirements for manufactured homes/mobile-homes and locate your local HCD office.
• 12 Month Test – Not Purchased for Use in California – Review frequently asked questions regarding the 12 month test period explained in Sales and Use Tax Regulation 1620.
• FAQ Exemptions & Exclusions: Vehicles, Vessels, Aircraft – Review frequently asked questions regarding exemptions and exclusions for vehicles, vessels, and aircrafts.

Small Business Trends

10 tax deductions for travel expenses (2023 tax year).

Tax season can be stressful, especially if you’re unaware of the tax deductions available to you. If you’ve traveled for work throughout the year, there are a number of deductions for travel expenses that can help reduce your taxable income in 2024 and save you money.

Read on for 10 tax deductions for travel expenses in the 2023 tax year.

Are business travel expenses tax deductible?

Business travel expenses incurred while away from your home and principal place of business are tax deductible. These expenses may include transportation costs, baggage fees, car rentals, taxis, shuttles, lodging, tips, and fees.

It is important to keep receipts and records of the actual expenses for tax purposes and deduct the actual cost.

What kinds of travel expenses are tax deductible?

To deduct business travel expenses, they must meet certain criteria set by the IRS.

The following are the primary requirements that a travel expense must meet in order to be eligible for a tax deduction:

• Ordinary and necessary expenses: The expense must be common and accepted in the trade or business and be helpful and appropriate for the business.
• Directly related to trade or business: The expense must be directly related to the trade or business and not of a personal nature.
• Away from home overnight: The expense must have been incurred while away from both the taxpayer’s home and the location of their main place of business (tax home) overnight.
• Proper documentation: The taxpayer must keep proper documentation, such as receipts and records, of the expenses incurred.

Eligible Business Travel Tax Deductions

Business travel expenses can quickly add up. Fortunately, many of these expenses are tax deductible for businesses and business owners.

Here is an overview of the types of business travel expenses that are eligible for tax deductions in the United States:

Accommodation Expenses

Accommodation expenses can be claimed as tax deductions on business trips. This includes lodging at hotels, rental costs of vacation homes, and other lodgings while traveling.

Meal Expenses

Food and beverage expenses incurred on a business trip may be deducted from taxes. This includes meals while traveling and meals during meetings with clients or contractors.

Transportation Expenses

Deducting business travel expenses incurred while on a business trip may also be claimed.

This includes flights, train tickets, car rentals, gas for personal vehicles used for the business trip, toll fees, parking fees, taxi rides to and from the airport or train station, and more.

Expenses of operating and maintaining a car

Expenses of operating and maintaining a car used for business travel may also be claimed as tax deductions.

This includes fuel, insurance, registration costs, actual costs of repairs, and maintenance fees. Fees paid to hire a chauffeur or driver may also be deducted.

Operating and maintaining house-trailers

Operating and maintaining house trailers for business travel may be eligible for tax deductions, provided that the use of such trailers is considered “ordinary” and “necessary” for your business.

This includes any costs associated with renting or owning a trailer, such as fuel costs, repair and maintenance fees, insurance, and registration charges.

Internet and phone expenses

Internet and phone expenses associated with business travel can also be claimed as tax deductions. This includes the cost of any internet service, such as Wi-Fi or data plans, and phone services, such as roaming charges or international calls.

Any communication devices purchased for business use, such as smartphones and laptops, may also be eligible for tax deductions.

Computer rental fees

Rental fees for computers and other computing devices used during business travel may also be deducted from taxes. This includes any applicable charges for purchasing, leasing, or renting a computer, as well as the related costs of connecting to the Internet and other digital services.

All such expenses must be necessary for the success of the business trip in order to qualify for a tax deduction.

Travel supplies

Travel supplies, such as suitcases and other bags, are also eligible for tax deductions when used for business travel. Any costs associated with keeping the items protected, such as locks and tracking devices, can also be claimed as tax deductions.

Other necessary supplies, such as office equipment or reference materials, may also be eligible for deductions.

Conference fees and events

Conference fees and events related to business travel may also be eligible for tax deductions. This includes fees associated with attending a conference, such as registration, accommodation, and meals.

Any costs related to the organization of business events, such as venue hire and catering, may also be claimed as tax deductions.

Cleaning and laundry expenses

Business travel expenses associated with cleaning and laundry may also be claimed as tax deductions. This includes a portion of the cost of hotel and motel services, such as cleaning fees charged for laundering clothing, as well as any other reasonable expenses related to keeping clean clothes while traveling away from home.

Ineligible Travel Expenses Deductions

When it comes to business expenses and taxes, not all travel expenses are created equal. Some expenses are considered “Ineligible Travel Expenses Deductions” and cannot be claimed as deductions on your income taxes.

Here is a list of common travel expenses that cannot be deducted, with a brief explanation of each:

• Personal Vacations: Expenses incurred during a personal vacation are not deductible, even if you conduct some business while on the trip. In addition, expenses related to personal pleasure or recreation activities are also not eligible for deductions.
• Gifts: Gifts purchased for business reasons during travel are not deductible, even if the gifts are intended to benefit the business in some way.
• Commuting: The cost of commuting between your home and regular place of business is not considered a deductible expense.
• Meals: Meals consumed while traveling on business can only be partially deducted, with certain limits on the amount.
• Lodging: The cost of lodging is a deductible expense, but only if it is deemed reasonable and necessary for the business trip.
• Entertainment: Entertainment expenses, such as tickets to a show or sporting event, are not deductible, even if they are associated with a business trip.

How to Deduct Travel Expenses

To deduct travel expenses from income taxes, the expenses must be considered ordinary and necessary for the operation of the business. This means the expenses must be common and accepted business activities in your industry, and they must be helpful, appropriate, and for business purposes.

In order to claim travel expenses as a deduction, they must be itemized on Form 2106 for employees or Schedule C for self-employed individuals.

How much can you deduct for travel expenses?

While on a business trip, the full cost of transportation to your destination, whether it’s by plane, train, or bus, is eligible for deduction.

Similarly, if you rent a car for transportation to and around your destination, the cost of the rental is also deductible. For food expenses incurred during a business trip, only 50% of the cost is eligible for a write-off.

How do you prove your tax deductions for travel expenses?

To prove your tax deductions for travel expenses, you should maintain accurate records such as receipts, invoices, and any other supporting documentation that shows the amount and purpose of the expenses.

Some of the documentation you may need to provide include receipts for transportation, lodging, and meals, a detailed itinerary or schedule of the trip, an explanation of the bona fide business purpose of the trip, or proof of payment for all expenses.

What are the penalties for deducting a disallowed business expense?

Deducting a disallowed business expense can result in accuracy-related penalties of 20% of the underpayment, interest charges, re-assessment of the tax return, and in severe cases, fines and imprisonment for tax fraud. To avoid these penalties, it’s important to understand expense deduction rules and keep accurate records.

Can you deduct travel expenses when you bring family or friends on a business trip?

It is not usually possible to deduct the expenses of taking family or friends on a business trip. However, if these individuals provided value to the company, it may be possible. It’s advisable to speak with an accountant or financial expert before claiming any deductions related to bringing family and friends on a business trip.

Can you deduct business-related expenses incurred while on vacation?

Expenses incurred while on a personal vacation are not deductible, even if some business is conducted during the trip. To be eligible for a deduction, the primary purpose of the trip must be for business and the expenses must be directly related to conducting that business.

Can you claim a travel expenses tax deduction for employees?

Employers can deduct employee travel expenses if they are ordinary, necessary, and adequately documented. The expenses must also be reported as taxable income on the employee’s W-2.

What are the limits on deducting the cost of meals during business travel?

The IRS permits a 50% deduction of meal and hotel expenses for business travelers that are reasonable and not lavish. If no meal expenses are incurred, $5.00 daily can be deducted for incidental expenses. The federal meals and incidental expense per diem rate is what determines the standard meal allowance.

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