10/21/2026
When SB 122 goes into law on January 1, 2027, California sales tax and use law will apply to prewritten software and SaaS platforms for public agencies, including eProcurement tools, at a rate of 7.25% plus applicable local district taxes.
This fundamental change to how software is handled means that every software purchase made on or after that date will be subject to this tax on the full contract price, both at signing and at every renewal.
If your agency is actively evaluating software, time is now of the essence. Signing before January 1 means you'll avoid the tax on a purchase for as long as the original contract is in effect.
PlanetBids is a California agency, and we understand your challenges. We've been helping public procurement teams in California and nationwide meet ever-changing compliance obligations, and we're ready to help you through this challenge as well.
If you've been considering digital procurement or thinking of making a vendor change, let's talk about why now is the time to make a move, before it becomes a bigger hit to your budget.