Solo SaaS founders · SB 122

California starts taxing SaaS on January 1. Toozi tracks, computes, and files it.

Text Toozi what you sell. It handles the rest.

Ask Toozi844-482-4881
Do I have to charge tax on my app?My customer is in TexasWhat's the rate in San Francisco?How do I file the CDTFA return?
Toozi: Yes, from Jan 1, 2027, for customers with a California address. State 7.25% plus their district. Want me to set you up now so April is boring?

Sell software or a subscription through your own Stripe, with customers in California? From January 1, 2027 you collect sales tax.
First return due April 30, 2027. Toozi makes it a copy-paste.

Rates from CDTFA, per customer addressBuilt for Stripe-billed foundersFiling included in the $49/mo plan
📱 Text 844-482-4881 — check in 60 seconds
Free 14-day trial · No credit card · State filing included, no add-on
Do you owe it?

Software, yes. Content and services, no.

SB 122 taxes prewritten software however it's delivered. It leaves custom work, media, and human effort alone.

Taxed from January 1, 2027
  • SaaS subscriptions and web apps
  • Mobile apps and downloadable software
  • Plugins, extensions, and paid APIs
  • AI tools sold to many customers, even with personalized output
  • Annual plans: the part of the term that falls in 2027
Still exempt
  • Custom software built for one client
  • Courses, ebooks, templates, and Notion-style kits
  • Music, video, streaming, and games
  • Hosting, cloud compute, and storage
  • Consulting, design, and done-for-you work

Selling through Paddle, Lemon Squeezy, Gumroad, or an app store? They collect and remit for you. Stripe is not a merchant of record, so if you bill through Stripe, this is yours. Outside California, it kicks in once your California sales pass $500,000 in a year.

How it works

From a text to a filed return.

1
Tell Toozi what you sell“I sell a $29/mo scheduling app through Stripe”Four questions by text: where you're based, what you sell, how you bill, whether you're registered. Toozi tells you if you owe it and what to do before January.
2
It tracks every California salecustomer address → rate → service periodEach sale is keyed on the customer's address with the exact CDTFA rate for that district. Annual plans that straddle January 1 are prorated by the day.
3
It builds the return“what do I owe for Q1?”Every line of the CDTFA-401 plus the Schedule A district split, in the order CDTFA's screens ask for it. Copy it in, or have Toozi file it for you. Both are part of the $49 plan.
Start tracking now

Ten steps so April is boring.

Do these before December 31. Most take minutes. Print it and check them off.

  1. Confirm you owe it. You sell prewritten software or SaaS: yes. Courses, ebooks, templates, music, video, games: no. Custom software for one client: no. Through Paddle, Lemon Squeezy, or an app store: they handle it. Direct through Stripe: you handle it.
  2. Know where you collect. Based in California: always, regardless of volume. Based elsewhere: once your California sales pass $500,000 in the current or prior calendar year.
  3. Register with CDTFA. A seller's permit is free and takes about twenty minutes in CDTFA Online Services. Pick a start date of January 1, 2027. Note the filing frequency they assign and put the permit number in Toozi.
  4. Learn the rate rule. It's the customer's address, not yours: 7.25% state plus district, up to about 10.75%. Toozi looks it up per customer.
  5. Fix your checkout. Collect a billing address on every sale. Turn on Stripe Tax, add the California registration dated January 1, 2027, and set your product tax code to SaaS. Tax shows as its own line and Toozi imports it.
  6. Handle the straddle. Annual plans sold in 2026 for service into 2027 are partly taxable. Toozi prorates by service period, so keep service dates on every invoice.
  7. Tell your customers. One email: the price stays the same, and tax is added for California addresses from January 1. Toozi has a template.
  8. Keep the paper. Resale, out-of-state-use, and multiple-points-of-use certificates from business customers. Toozi stores them against the customer.
  9. File. Quarterly by the last day of the following month for most founders. Toozi builds the CDTFA-401 and Schedule A; you copy it in or Toozi files it for you.
  10. Don't forget. Refunds reduce taxable sales. Tax you over-collected still gets remitted. Cross about $17,000 a month in taxable sales and CDTFA adds prepayments.
Do it with Toozi by text

January 1, 2027 is day one.

April 30, 2027 is the first return with software sales in it. Register, fix checkout, and start tracking before December 31.

Not ready to text?

Get the checklist by email.

Plus one note when the return builder opens. Nothing else.

Rates straight from CDTFA
Destination sourcing built in
IRS Authorized E-File Provider
Twilio Verified
📱 Text 844-482-4881 — check in 60 seconds

14-day free trial · no card. By texting, you agree to receive SMS from Toozi. Msg frequency varies, msg & data rates may apply. Reply STOP to opt out, HELP for help. See our Terms and Privacy Policy. Tax rules summarized from SB 122 and CDTFA's proposed regulations; not legal advice.

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