California will tax downloaded software for the first time as part of a $351.7 billion budget deal
THE SO WHAT
California extending sales tax to downloaded prewritten software—targeting roughly $2 billion in new revenue—blurs the line between SaaS and software licenses from a tax perspective. If you sell into or operate from California, get your tax and pricing teams aligned now on how this hits margins, list prices, and contract structures for packaged and AI add-on software.
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