News and Insights

California Adopts Estimated Use Tax Regulation for Individual Taxpayers

Tax Development Oct 07, 2011

The California State Board of Equalization (BOE) has adopted Sales and Use Tax Regulation 1685.5, which provides procedures for reporting “estimated use tax.” Beginning with the 2011 tax year, individuals may pay an estimated use tax.

Estimated use tax is based on a taxpayer’s adjusted income multiplied by a “use tax liability factor” calculated by the BOE each year. For the 2011 calendar year, the factor is .07%. The following chart provides the estimated use tax due based on income.

Adjusted Gross Income (AGI) Range   Use Tax Liability
Less Than $20,000   $7
$20,000 to $39,999   $21
$40,000 to $59,999   $35
$60,000 to $79,999   $49
$80,000 to $99,999   $63
$100,000 to $149,999   $88
$150,000 to $199,999   $123
More than $199,999 - Multiply AGI by 0.070% (.0007)

A taxpayer who pays the estimated use tax is also liable for tax on items purchased for $1,000 or more from non-permitted sellers. Further, a taxpayer who does not pay the estimated use tax owes use tax on all of his or her out-of-state purchases.

The estimated use tax is expected to add an additional $10 million in revenue each year to the state’s coffers. California also expanded its definition of nexus for the collection of use tax to include out-of-state sellers with related entities acting on their behalf and sellers who pay California websites to solicit orders of taxable items.


Dave Naney