CDTFA guidance on SB 122 — what's settled, what's pending
SB 122 was signed June 29, 2026 and takes effect Jan 1, 2027. The statute is clear on the core base (prewritten software + SaaS taxable; custom software, IaaS, digital audio/video/books/games/crypto exempt). What's still being worked out:
Bundles: SaaS-plus-services and customized offerings (the taxable/exempt split is a judgment call)
AI/"primarily standardized software" — the single most ambiguous area
Infrastructure "principally" test
Annual contracts spanning 1/1/2027 (the law doesn't directly resolve them)
Registration with the CDTFA is expected to spike as the deadline nears.
Your 2027 checklist
Confirm nexus ($500K econ or physical)
Classify your products (prewritten vs custom vs infra vs content)
Capture + validate a CA billing address at checkout
Build district-rate lookup or use a tax engine (storefronts often handle this)