California sales tax increases by 1% on April 1

If you are planning to make a major purchase soon, you may want to act before April 1, when the statewide California sales tax increases by 1%.

The temporary 1% tax rate increase will expire on either July 1, 2011, or July 1, 2012, depending upon whether voters approve the proposed Proposition 1A, Budget Stabilization Act, in a statewide election to be held May 19, 2009.

There is an exemption from the tax rate increase for fixed-price contracts and fixed-price lease agreements entered into prior to April 1, 2009. To qualify as fixed-price,:

• Neither party can have the unconditional right to adjust the price for an increase in costs or terminate the contract or lease, and
• The tax amount or rate must be specifically stated in the contract or lease agreement.

For more information, including FAQs about the tax increase, please visit the California State Board of Equalization website.