Do you have California nexus for software/SaaS? (SB 122, 2027)

SB 122 makes prewritten software and SaaS taxable in California from Jan 1, 2027 — but only if you have nexus. Nexus is the legal reason California can require you to register and collect. Two ways to have it:

1. Economic nexus — $500,000 in CA sales

If your CA gross sales exceed $500,000 in the current or prior calendar year, you have economic nexus. Critically, newly taxable software/SaaS receipts count toward this threshold — so a non-California company that's been selling SaaS under the radar can cross it when software becomes taxable.

2. Physical presence

An office, employees, inventory, or an agent/representative in California also creates nexus — regardless of sales volume.

Who's affected

Non-CA software companies selling into CA (EU/small teams included) — the common surprise
CA-based SaaS companies (in scope by default)
Marketplace sellers (the platform may collect for you — check their policy)

No nexus? No collection obligation — but a CA purchaser may still owe use tax on software they buy and use in California.

Use the decision tool for product type + the $5M carve-out. Sourcing →