Sales Tax in San Francisco City California for Businesses

San Francisco is home to thousands of businesses operating across diverse industries, from retail and hospitality to tech and e-commerce. For any company selling goods or services in the city, understanding the San Francisco sales tax structure is not just a compliance requirement, it’s a critical part of smart financial planning. 

This guide offers a comprehensive overview of the current San Francisco sales tax rates, applicable exemptions, nexus criteria, and filing procedures to help your business stay on track and avoid costly penalties.

What Is the Sales Tax in San Francisco?

As of 2025, the rate of sales tax in San Francisco is 8.625%, which includes:

• California state sales tax: 7.25%
• San Francisco county and district taxes: 1.375%

This rate applies to most retail sales, including online transactions shipped to addresses within San Francisco. If your business has established a nexus in California, you are required to collect this rate when fulfilling qualifying orders in the city.

Specific Sales Tax Rules for San Francisco

San Francisco operates under California’s broader tax structure, but certain local factors may affect how tax is applied:

• Multiple district taxes may apply based on ZIP code, requiring accurate rate calculations at checkout.
• Marketplace facilitators (e.g., Amazon, Etsy) are generally responsible for collecting and remitting tax on your behalf, but only for sales processed through their platform.
• Direct website sales or non-facilitator channels still require individual compliance.

Using a San Francisco sales tax calculator helps ensure your checkout process applies the correct rate every time.

Is What You’re Selling Taxable in San Francisco?

In San Francisco, the taxability of your products depends on what you’re selling and how it’s delivered. This is especially critical for e-commerce businesses fulfilling orders online. Most physical goods are taxable, but exemptions and nuanced rules can apply depending on the item and buyer.

Here’s a breakdown to help you assess your catalog:

Taxable Items:
Most tangible personal property sold to customers in San Francisco is subject to the full San Francisco state sales tax rate. This includes:

• Apparel and footwear
• Electronics and home appliances
• Furniture, tools, and office supplies
• Physical books, toys, and beauty products

Exempt or Nontaxable Items:
Certain product categories are fully exempt from sales tax under California law. Sales tax exemptions in California include:

• Unprepared grocery food (e.g., packaged bread, fruits, and vegetables)
• Prescription medications and certain medical devices
• Sales to qualified nonprofits or government entities (with valid exemption documentation)

Conditionally Taxable Items:
For online sellers, certain goods and services may require closer evaluation:

• Digital products: Taxable if delivered in a tangible format (e.g., downloads), but often exempt if streamed or accessed in the cloud
• Custom software or SaaS: Generally taxable if licensed for use and delivered electronically
• Bundled products: If you sell a mix of taxable and non-taxable items, the entire bundle may become taxable if not itemized separately

To ensure compliance, use a sales tax calculator for San Francisco or an automated tax engine to classify each product accurately. Misclassifying tax-exempt items can lead to overcharges, while failing to apply tax to taxable goods may trigger audits and penalties.

Determining Nexus in San Francisco 

For e-commerce businesses, understanding the sales tax nexus is the first and most important step in determining whether you’re required to collect and remit San Francisco sales tax. Nexus is the legal connection between your business and the state, or in this case, the city, that creates a tax obligation.

In California, including San Francisco, you may establish nexus through:

Economic Nexus

Under California economic nexus rules, if your total sales into California exceed $500,000 annually, regardless of whether you have a physical presence in the state, you are required to collect and remit sales tax on taxable sales. This includes:

• Direct-to-consumer sales through your website
• Marketplace sales (though the marketplace may handle collection)
• B2B transactions involving taxable goods

Physical Nexus

You may also have nexus in San Francisco if your business has:

• A storefront, office, or warehouse located in the city
• Employees, contractors, or agents working locally
• Inventory stored in a fulfillment center, such as an Amazon FBA warehouse in California
• Regular attendance at trade shows or pop-up events within San Francisco

Affiliate Nexus

If you partner with affiliates, influencers, or advertising partners who operate within San Francisco and help generate sales for your business, this may also trigger nexus under California’s rules.

Once the nexus is established, you must:

1. Register for a California seller’s permit via the CDTFA
2. Collect the correct San Francisco sales tax rate for taxable orders shipped into the city
3. Remit returns on time based on your assigned filing frequency

Because nexus rules can change based on your sales channels and growth, it’s crucial to regularly evaluate your business footprint across California. Sales tax automation tools can help monitor nexus thresholds and alert you when registration is required.

Tax Rates in San Francisco, California

For e-commerce sellers shipping products to customers in San Francisco, applying the correct sales tax San Francisco rate is critical to avoiding compliance issues. California uses a destination-based sourcing model, meaning the tax rate is determined by the buyer’s delivery address, not your business location.

As of 2025, the combined San Francisco sales tax rate is:

Things to keep in mind for E-Commerce:

• Accurate ZIP code mapping: San Francisco’s district tax applies based on location, so ensure your checkout process collects full shipping addresses and calculates taxes accordingly.
• Multiple delivery points: If your order ships to multiple California cities, each delivery line may be taxed at a different rate.
• Marketplace facilitator impact: If you sell via platforms like Etsy or Amazon, they may be responsible for collecting and remitting this tax. However, for direct sales, it’s your responsibility to apply the correct San Francisco California sales tax percentage.

Use a sales tax calculator for San Francisco to automate rate determination and avoid under- or overcharging your customers.

Other Tax Rates for San Francisco

In addition to the standard San Francisco sales tax percentage, e-commerce businesses may encounter other city-specific taxes or fees depending on the products sold or the nature of the transaction. While these additional taxes don’t apply to every seller, it’s important to be aware of them to ensure full compliance, especially if your product catalog or delivery model is diverse.

Special District and Industry-Specific Taxes:

While the standard San Francisco sales tax rate applies to most transactions, certain industries and product types may be subject to additional district taxes or special regulatory fees that e-commerce sellers should be aware of.

Digital Goods & Downloads

• In California, digital products are generally not taxable if they are accessed via streaming or the cloud.
• However, if a digital product is delivered in tangible form (e.g., via USB or DVD) or considered a software license, it may be subject to sales tax.
• Be sure to classify your digital offerings correctly in your product catalog.

Prepared Food & Beverage Deliveries

• If you’re in the food e-commerce space (meal kits, pre-packaged meals, local deliveries), prepared food is fully taxable in San Francisco even if delivered via third-party platforms.
• Unprepared grocery items (e.g., dry pasta, fresh produce) are generally exempt.

Luxury or Sin Tax Categories

• Alcoholic beverages, tobacco products, and cannabis are subject to additional excise taxes and must comply with both state and local licensing rules.
• These taxes are typically collected at the distributor level, but online retailers may still be responsible for verifying permits and ensuring accurate labeling.

Tourism & Lodging (If Applicable)

• If your e-commerce business offers short-term rentals or travel-related services in San Francisco, be aware of the Transient Occupancy Tax (TOT) and additional hotel taxes.

While most online retailers will primarily deal with the standard 8.625% rate, these edge cases are important to flag, especially if your offerings extend into niche categories like software, food, or regulated goods.

What Items Are Exempt from Taxes in San Francisco?

While most tangible goods sold online are subject to San Francisco sales tax, California law provides specific exemptions that apply statewide, including within San Francisco. For e-commerce sellers, understanding and correctly applying these exemptions can prevent costly errors, customer disputes, and compliance issues.

Commonly Exempt Items:

Although most physical goods sold online are taxable, California law applied in San Francisco provides key exemptions that e-commerce sellers must understand to avoid overcharging customers or misreporting taxable sales, such as,

• Unprepared Food Items
  Grocery staples such as rice, bread, vegetables, and bottled water are generally not taxable. However, if you’re selling prepared meals, snacks, or hot food for delivery, those items become fully taxable.
• Prescription Medications & Certain Medical Devices
  Products sold with a valid prescription such as insulin, inhalers, or eyeglasses are exempt. Some durable medical equipment may also qualify, depending on usage and documentation.
• Resale Purchases
  If you’re buying products for resale (e.g., inventory for your own online store), these purchases are exempt from sales tax when you provide a valid California Resale Certificate to your supplier.
• Sales to Nonprofit Organizations
  Transactions involving eligible nonprofits may be exempt, but the buyer must provide proof of exemption and meet specific criteria outlined by the California Department of Tax and Fee Administration (CDTFA).

Key Considerations for Online Sellers:

• Clear Product Classification: Ensure your catalog accurately identifies taxable vs. exempt products. Many platforms allow you to set tax rules at the SKU level and use this feature to minimize errors.
• Sales Documentation: Always collect exemption certificates for resale or nonprofit purchases and store them digitally in case of an audit.
• Mixed Orders: If you’re selling both taxable and exempt items in a single order, make sure the tax is applied only to the eligible portion.

Using automated tax software or a San Francisco sales tax calculator can simplify exemption logic and help ensure your checkout process is fully compliant.

Filing Sales Tax Returns in San Francisco

Once you begin collecting San Francisco sales tax, you’re legally required to file returns and remit the collected tax to the California Department of Tax and Fee Administration (CDTFA). For e-commerce sellers, filing accurately and on time is crucial to maintaining compliance, especially if you’re operating across multiple cities or states.

Filing Requirements for Online Sellers:

Once you’re registered to collect sales tax in California, fulfilling your filing obligations becomes critical to running a compliant e-commerce business, especially when selling to customers in San Francisco. 

Here are the filing requirements for online sellers:

• Registration
  Before filing, you must register for a California seller’s permit via the CDTFA website. This allows you to collect and remit sales tax from San Francisco and across the state.
• Filing Frequency
  The CDTFA assigns a filing frequency based on your sales volume:
  • Monthly: For high-volume sellers
  • Quarterly: For mid-range sales activity
  • Annually: For low-volume sellers
• Your filing frequency may be adjusted over time depending on your revenue levels.

How to File
Sales tax returns must be filed electronically through the CDTFA e-Services Portal. You’ll report:

• Total sales
• Taxable sales
• Tax collected by jurisdiction (e.g., San Francisco-specific rates)

If you’re using third-party tools or platforms, ensure they generate accurate, detailed reports to simplify the filing process.

Due Dates
Returns are generally due by the last day of the month following the end of your reporting period. For example, January sales are due by February 28 (or 29 in a leap year).

• Penalties for Non-Compliance
  Late filings or payments can result in:
  • A 10% penalty on the tax owed
  • Daily interest charges until paid
  • Potential audit flags or suspension of your seller’s permit

Even if you didn’t make any sales in a given period, you’re still required to file a zero return. Missing a filing, even with no tax due, can trigger penalties.

To stay organized, consider using a sales tax automation platform that integrates with your e-commerce system and auto-generates state-compliant filings. 

Need help managing sales tax across California? Use Commenda’s San Francisco Sales Tax Calculator to get precise rates and explore our full suite of automated tax tools designed to simplify compliance, reduce manual errors, and grow your business with confidence.

FAQs for San Francisco Sales Tax for E-Commerce Sellers

Q. How do I register for a sales tax permit in San Francisco?

Businesses in San Francisco can simplify their sales tax permit registration by leveraging Commenda’s tailored solutions for efficient and hassle-free compliance.

Q. When are sales taxes due in San Francisco?

Due dates depend on your assigned filing frequency. Monthly filers must submit their returns by the last day of the following month. Quarterly filers are required to file by the end of the month following the close of each quarter. For annual filers, tax is typically due by January 31 of the following year. You can view and manage your specific deadlines by logging into your CDTFA account.

Q. How do I file a sales tax return in San Francisco?

San Francisco businesses can manage their sales tax filings efficiently with Commenda’s specialized services, ensuring compliance with California tax regulations.

Q. What happens if I collect sales tax but don’t remit it?

Failing to remit collected sales tax is considered a serious offense in California. It can result in financial penalties, including interest charges, and may trigger audits or increased scrutiny from state tax authorities. In more severe cases, failure to remit may lead to legal action, including potential criminal charges for tax fraud. 

Q. Are services sold online taxable in San Francisco?

In general, most services are not subject to sales tax in California. However, if your service results in the creation or transfer of tangible personal property, such as a custom-printed product or downloadable file, it may be taxable. Similarly, certain digital goods and SaaS products may fall under taxability rules depending on delivery format and licensing.