The sales tax rate in Morro Bay, California is 8.75 percent as of April 2026. That figure combines California’s 7.25 percent statewide base with 1.5 percent in locally approved transaction taxes, and it applies to most retail purchases made inside city limits whether you live there or you’re visiting for the weekend.
How the Rate Is Built
Every California sales tax rate starts at the same statewide floor of 7.25 percent, set by the Revenue and Taxation Code and collected by the California Department of Tax and Fee Administration (CDTFA).1California Department of Tax and Fee Administration. California City and County Sales and Use Tax Rate Information San Luis Obispo County does not add a countywide district tax, so unincorporated areas of the county stay at that 7.25 percent minimum.
Morro Bay’s extra 1.5 percent comes from two voter-approved measures, which push the published total to 8.75 percent on the CDTFA’s rate schedule.2California Department of Tax and Fee Administration. California City and County Sales and Use Tax Rates
Measure Q (2006)
Voters first approved Measure Q in 2006, adding a half-cent (0.5 percent) transaction and use tax. The revenue funds essential services such as firefighter and paramedic equipment, police operations, street and pothole repairs, and storm drain improvements to protect the bay from pollution.3City of Morro Bay. FY 2025-26 Operating and Capital Budget – Measure Q and E Fund
Measure E-20 (2020)
In November 2020, voters passed Measure E-20, which raised the city’s total local transaction tax from 0.5 percent to 1.5 percent by adding another full cent. Measure E-20 funds 24/7 police and paramedic services, 911 emergency response, beach and public-area maintenance along the Embarcadero and Harbor, infrastructure investment, and general financial stability for the city. The measure has no set expiration date and remains in effect until voters choose to repeal it.3City of Morro Bay. FY 2025-26 Operating and Capital Budget – Measure Q and E Fund The CDTFA administers and collects both taxes on the city’s behalf.
What You Pay 8.75 Percent On
The tax applies to sales of tangible personal property, meaning physical items you can touch and take home. Clothing, furniture, household electronics, appliances, and similar retail goods all carry the full 8.75 percent. Prepared meals served at restaurants, cafes, food trucks, and concession stands are taxable too, whether you eat on-site or take the food with you.4California Department of Tax and Fee Administration. Regulation 1603 – Taxable Sales of Food Products Vehicle purchases are subject to the rate for the jurisdiction where the vehicle will be registered.
What’s Exempt
Not everything you buy in Morro Bay triggers the tax. The main exemptions:
- Groceries. Food products purchased for home consumption, such as produce, dairy, bread, and canned goods, are exempt. Hot prepared food and items sold for immediate consumption (a deli sandwich eaten in the store, for example) are taxable.5California Department of Tax and Fee Administration. Sales and Use Tax Regulations – Article 8
- Prescription medications. Medicines dispensed under a prescription are exempt under Revenue and Taxation Code Section 6369. Over-the-counter drugs are taxable.5California Department of Tax and Fee Administration. Sales and Use Tax Regulations – Article 8
- Digital products. Software, eBooks, mobile apps, and digital images delivered electronically over the internet are generally not taxable. If the seller also provides a physical copy, such as a flash drive backup, the entire sale becomes taxable.6California Department of Tax and Fee Administration. Internet Sales
The digital-product rule catches people off guard. A streaming subscription or app download bought from your phone in Morro Bay typically carries no sales tax, but the same software on a disc at a local store falls under the full 8.75 percent.
What You Owe on Out-of-State Purchases
When you buy something from an out-of-state retailer that doesn’t charge California sales tax, you owe a “use tax” at the same 8.75 percent rate. The use tax keeps local shops on even footing with out-of-state sellers, and it applies to anything you buy from another state for use, storage, or consumption in Morro Bay.7California Department of Tax and Fee Administration. Sales and Use Tax in California
Most large online retailers already collect California sales tax at checkout, so for everyday purchases the use tax rarely comes up. It becomes relevant when you buy from a smaller out-of-state vendor, pick things up while traveling, or import items from abroad. You can report what you owe directly on your California income tax return using Form 540 or 540 2EZ. For non-business items that cost less than $1,000 each, a lookup table in the tax return instructions lets you estimate without tracking every receipt. The deadline to pay is April 15 of the year after the purchase.8California Department of Tax and Fee Administration. California Use Tax for Personal Use
Vehicles, vessels, aircraft, and mobile homes are the exception. Those purchases cannot be reported on your income tax return and must go directly to the CDTFA.8California Department of Tax and Fee Administration. California Use Tax for Personal Use