The Party’s Over: After More Than Three Decades, California Will Begin Taxing SaaS

Gov. Gavin Newsom on June 29, 2026, signed Senate Bill 122 (SB 122, Chapter 23), a budget trailer bill that, among other provisions, extends California’s sales and use tax to “digital products,” defined as prewritten computer software transferred electronically or accessed remotely. This marks a significant shift in California tax policy. For the first time, software-as-a-service (SaaS) and other remotely accessed software will be subject to California sales tax, effective January 1, 2027. With…
By: Holland & Knight LLP