Subscribe

Subscribe to Our Newsletter

Success! Now Check Your Email

To complete Subscribe, click the confirmation link in your inbox. If it doesn’t arrive within 3 minutes, check your spam folder.

Ok, Thanks

California Sales Tax on Discounts, Coupons, and Rebates: Everything You Need to Know

Understand how California sales tax applies to discounts, coupons, rebates, and gift cards. This guide breaks down the rules for consumers and businesses with examples, checklists, and official references.

California Sales Tax on Discounts, Coupons, and Rebates: Everything You Need to Know post image

Discounts and promotions are everywhere—from manufacturer coupons to holiday BOGO sales—but knowing which ones are taxable in California can be confusing. This guide breaks it down.

We’ve built a full library of resources to help consumers, business owners, and tax professionals understand how California's sales tax laws apply to coupons, rebates, discounts, gift cards, and more.

Overview: What Affects Taxability?

California’s tax laws don’t just look at the final sale price—they consider how that price was reduced.

Factors that determine whether a discount or incentive is taxable:

  • Who issued the discount (manufacturer, store, third party)?
  • Is the retailer reimbursed for the discount?
  • Was the item sold bundled or part of a promotional giveaway?
  • Does the discount reduce the “gross receipts” reported to CDTFA?

The answers change how much tax is due—and who’s responsible for paying it.

Our Guides to Taxes on Discounts in California

Do You Pay Sales Tax on Coupons in California?
California treats store coupons and manufacturer coupons differently when it comes to sales tax. Learn when a discount reduces your tax—and when it doesn’t.
CaliforniaToday.comMac Douglass
How Sales Tax Works on BOGO and “Free” Offers in California
Buy-one-get-one offers may not be as tax-free as they seem. Learn how California applies sales tax to BOGO deals, including when “free” still means taxable.
CaliforniaToday.comMac Douglass
What Is a Taxable Rebate in California?
Rebates can reduce the amount you pay—but they don’t always reduce the amount of sales tax owed. Learn which rebates are taxable and why it depends on who provides the money.
CaliforniaToday.comMac Douglass
Are Gift Cards Taxable in California?
Gift cards themselves are not taxed in California—but what you buy with them is. Learn when sales tax applies and how it works with gift card promotions.
CaliforniaToday.comMac Douglass
Business Discount Tax Rules in California
Offering discounts? Learn how California sales tax applies to coupons, rebates, bundle deals, and BOGO offers so you don’t make costly compliance mistakes.
CaliforniaToday.comMac Douglass
Understanding Gross Receipts and Sales Tax in California
In California, sales tax is based on gross receipts—but what exactly counts? Learn what must be included, what can be excluded, and how to report it properly.
CaliforniaToday.comMac Douglass

Official Sources Used

All our content is based on California’s official rules and documentation, most notably:

Bottom Line

Whether you’re a shopper using a coupon or a business owner running a promotion, knowing how sales tax applies can help you avoid surprises—and costly mistakes.

We’re here to help. Start with any of the guides above, or contact us if you need help finding the right one.