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California: Partial Tax Exemptions to Decrease, January 2016


 Partial exemptions in California to decrease, January 2016.

California’s 2004 Proposition 57 enabled the state to purchase bonds to reduce the state’s deficit. Under the provisions of the proposition, certain sales and purchases qualify for a partial exemption from sales and use tax.

Currently, California provides partial exemptions for the following:

  • Manufacturing and research and development equipment
  • Teleproduction or other postproduction service equipment
  • Farm equipment and machinery
  • Diesel fuel used in farming activities or food processing
  • Timber harvesting equipment and machinery
  • Racehorse breeding stock

Since the bonds have now been paid in full, most partial tax exemptions will decrease by 0.25% in the new year. Effective January 1, 2016, the partial exemption for the following will drop from 5.5% to 5.25%:

  • Rural investment
  • Teleproduction
  • Farm equipment/machinery
  • Timber harvesting equipment
  • Racehorse breeding stock

In addition, the partial exemption for diesel fuel used in farming activities or food processing will drop from 7.25% to 7%. Additional information is available in California State Board of Equalization Information Bulletin 388.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.