California Partial Sales Tax Exemption

Questions? Contact SCM Response Team

Overview

There is a temporary California Partial Sales Tax Exemption. This special tax regulation creates a reduced tax rate for certain purchases in the state of California. 

ATTENTION—

The University of California system has reach the annual $200 million limit for partial sales and use tax exemption for R&D purchases for the remainder of the 2024 calendar year. Learn more at Suspension of Partial Sales and Use Tax Exemption on R&D.

Current Tax Incentive

Effective July 1, 2014 through 2030, the California Department of Tax and Fee Administration's Regulation 1525.4 – Manufacturing and Research and Development Equipment – allows “partial sales and use tax exemption” on certain manufacturing and research and development equipment purchases and leases.

As of January 1, 2017 the partial exemption rate is 3.9375 percent, making the partial sales and use tax rate equal to 4.6875 percent for San Francisco County and 5.9375 percent for South San Francisco, San Mateo County.

California Partial Sale Tax Exemption Criteria

To be eligible under this law, UCSF purchasers must meet all three of these conditions:

  1. Be engaged in certain types of business, also known as a “qualified person.”
  2. Purchase “qualified property” valued at $5,000 and over.
  3. Use that “qualified property” for the “qualified activity” allowed by this law.

The research and development activities must either be in:

  • Biological sciences (NAICS code 541711), or
  • Physical science (NAICS code 541712)

It is your department’s responsibility to ensure that the product being purchased qualifies for partial sales tax exemption. If it is later determined that the purchase does not qualify for the sales tax exemption, your department will be responsible for the additional tax assessment, fines and interest.

How to claim partial tax exemption

A Partial Exemption Certificate for Manufacturing, Research and Development Equipment (CDTFA-230-M) is required to be completed for every product. A signed form for every applicable product must be attached to your BearBuy cart. Have the Principal Investigator or department financial manager certify and sign the Partial Exemption Certificate.

In BearBuy, navigate to the General section within the Requisition Summary tabs. Click the edit button next to the section containing the CA Partial Sales Tax name. Check the CA Partial Sales Tax checkbox and then click the Save button.  Then complete the shopping process. For detailed instructions, please refer to the Partial Sales Tax Exemption Job Aid.

BearBuy Form to Use

All qualifying products must have a value of $5,000 or more and be ordered on one of the following forms:

  • Non-Catalog Form
  • Capital Equipment Form
  • Amount-Based PO Form