The sales tax rate in Modesto, California is 8.875%. That total combines California’s statewide 7.25% base rate with 1.625% in local district taxes that fund city services, countywide road work, and library operations. You pay it on most retail purchases of physical goods inside the city.
What Makes Up the 8.875% Rate
The 7.25% statewide portion applies everywhere in California and is set by the state.1California Department of Tax and Fee Administration. Detailed Description of the Sales and Use Tax Rate The remaining 1.625% comes from three local district taxes:
- Measure H, a 1% city tax approved by Modesto voters in November 2022. It funds police patrols, fire protection, paramedic and 911 response, homelessness programs, trash and illegal dumping cleanup, and maintenance of streets, parks, and sidewalks, and generates over $40 million per year.2Modesto, CA. What is Measure H
- Measure L, a 0.5% countywide tax approved by Stanislaus County voters in November 2016. It funds street and road improvements, connectivity projects, and congestion reduction, and runs for 25 years starting April 1, 2017.3Stanislaus Council of Governments. Measure L
- A 0.125% library tax that supports countywide library programs and operations, including new materials, technology, and children’s and teen programs.4eCode360. Chapter 4.18 Library Transactions and Use Tax
California caps total district taxes at 2% per county, so Modesto still has room under that ceiling.5California Department of Tax and Fee Administration. Revenue and Taxation Code 7251.1 – Limitation Rate of Tax If future measures pass, the rate could rise, but 8.875% is what applies today.
What You Pay Sales Tax On
The 8.875% rate applies to retail sales of tangible personal property: clothing, electronics, furniture, household items, building materials, and similar physical goods.6California Department of Tax and Fee Administration. Revenue and Taxation Code Section 6006 – Sale Services that don’t involve handing over a physical product generally are not taxed. Haircuts, legal work, and accounting fees fall outside the sales tax base.
A few categories trip people up because the rule depends on how the item is sold rather than what it is.
Groceries vs. Prepared Food
Food you buy to take home and cook is exempt.7California Department of Tax and Fee Administration. California Revenue and Taxation Code 6359 – Food Products Rice, eggs, bread, and fresh produce ring up without sales tax. The exemption disappears once food is sold hot or prepared for immediate eating. The rotisserie chicken from the deli counter is taxable; the raw chicken from the meat case is not.
Restaurants and similar food businesses sit under what’s called the “80-80 rule.” If more than 80% of a business’s gross receipts come from food sales and more than 80% of those food products are taxable, every sale becomes taxable unless the business separately tracks exempt items like cold to-go food and hot beverages on guest checks or register tapes.8California Department of Tax and Fee Administration. Tax Guide for Restaurant Owners For a customer, the practical effect is that a cold sandwich grabbed to go at a Modesto deli may or may not carry tax depending on how that specific business is set up.
Prescription Medicines
Prescription medicines dispensed by a registered pharmacist on the order of a licensed physician, dentist, or podiatrist are exempt. Insulin, insulin syringes, glucose test strips, and lancets furnished to diabetic patients are exempt as well, with or without a specific prescription.9California Department of Tax and Fee Administration. Drug Stores Over-the-counter medications are taxable at the full 8.875%.
Digital Products and Streaming
Software, ebooks, apps, music, and other digital products delivered entirely by download or stream are generally not taxed in California. Delivery method is what controls the result. If the seller also provides a backup copy on a flash drive or a printed version of the content along with the download, the whole sale becomes taxable.10California Department of Tax and Fee Administration. Internet Sales Publication 109 – Nontaxable Sales Streaming subscriptions and cloud-based software accessed through a browser also sit outside the sales tax base.
Online and Out-of-State Purchases
When you buy something from an out-of-state retailer that doesn’t collect California sales tax, you owe use tax at the same 8.875% rate. This covers online purchases, catalog orders, and goods you bring back from a trip to another state. If the out-of-state seller charged some tax but less than 8.875%, you owe the difference.11California Department of Tax and Fee Administration. California Use Tax, Good for You. Good for California
Most individual consumers report and pay use tax on their California state income tax return, which includes a worksheet and lookup table. Most major online retailers now collect California tax automatically, so use tax mainly comes up with smaller sellers, private-party sales, and items bought while traveling.11California Department of Tax and Fee Administration. California Use Tax, Good for You. Good for California
If You’re Selling in Modesto
Anyone selling or leasing physical goods in Modesto needs a seller’s permit from the California Department of Tax and Fee Administration. This applies to permanent storefronts, temporary vendors like fireworks booths and farmers’ market sellers, and online sellers shipping into California. The permit is free, and many applicants receive it immediately after submitting the online application.12California Department of Tax and Fee Administration. Obtaining a Sellers Permit A seller’s permit also lets you issue resale certificates when buying inventory, so you don’t pay sales tax on goods you’ll resell to a customer.
Out-of-state businesses must register once they exceed $500,000 in gross sales of tangible personal property delivered into California in the preceding or current calendar year. Marketplace sales count toward that threshold, and registration is required on the day the threshold is crossed.
CDTFA assigns each permit holder a filing frequency based on sales volume: monthly, quarterly, or annual. Most small businesses file quarterly, with returns due the last day of the month after the quarter ends: April 30, July 31, October 31, and January 31.13California Department of Tax and Fee Administration. Filing Dates for Sales and Use Tax Returns Missing a deadline or underpaying triggers a 10% penalty on the unpaid tax, plus interest, and the penalty applies automatically without an audit.14California Department of Tax and Fee Administration. Regulation 1703