Sunset of Bond Measure Affects Partial Tax Exemptions

Effective January 1, 2016, the following partial California sales and use tax exemptions will decrease from 5.5% to 5.25%:

  • Manufacturing and research and development (R&D) equipment
  • Teleproduction or other postproduction service equipment
  • Farm equipment and machinery
  • Timber harvesting equipment and machinery
  • Racehorse breeding stock.

The partial exemption provided for diesel fuel used in farming activities or food processing will decrease from 7.25% to 7%, also effective January 1, 2016.

California voters approved Proposition 57 (bond measure) in March 2004. That measure allowed the state to purchase bonds to reduce the state budget deficit. Proposition 57 changed the state and local components of the statewide tax rate, but the total statewide tax rate remained unchanged. Bonds associated with Proposition 57 have now been paid in full.

Source – BOE Publication 388, Tax Information Bulletin, California State Board of Equalization, September 2015