- California legislation SB 122, signed on June 29, 2026, expands sales tax to digital products including prewritten software and SaaS, effective January 1, 2027.
- Transactions involving digital products transferred via tangible media, electronically, or accessed remotely are now subject to sales and use tax, but custom software remains exempt.
- The law introduces new sourcing rules and shifts tax liability from retailers to purchasers for certain transactions, especially those exceeding $5 million in aggregate.
- Vendors and buyers of software and SaaS must prepare for new tax collection, remittance, and cost implications by the effective date.