LA Sales Tax Is Going Up October 1st, 2026. What Local Business Owners Need to Know
By The Tax Shack | September 2026 | Los Angeles, CA
If you own a business in Los Angeles County, your sales tax rate is about to go up. On October 1, 2026, Measure ER passed by LA County voters in June adds 0.5% to the countywide sales tax rate, pushing the baseline from 9.75% to 10.25%.
For businesses in cities with their own local taxes stacked on top, the combined rates go higher:
Los Angeles (baseline): 9.75% → 10.25%
Burbank: 10.5% → ~11%
Palmdale / Lancaster: 11.25% → ~11.75%
Some LA areas with additional local district taxes: approaching 12%
California already has the highest sales tax in the nation. October 1st makes it higher.
What Is Measure ER?
Measure ER was placed on the June 2, 2026 ballot and passed by more than 25,000 votes. It adds a half-cent (0.5%) sales tax countywide, framed as funding for hospitals, local health departments, and low-income residents needing insurance coverage. Revenues go to LA County's general fund for elected officials to allocate and the tax is set to expire in 2031. (The National Desk, June 29, 2026)
What It Means for Your Customers
The increase is incremental on individual transactions. A few examples of what the 0.5% adds:
$40,000 car: ~$200 more in tax
$3,000 living room set: ~$15 more
$1,000 purchase (electronics, equipment): ~$5 more
For most everyday transactions, customers won't balk at it. But as LA County Taxpayers Association Chairman Aidan Chao notes, when rates in Lancaster and Palmdale hit 11.75%, "you're going to jump across the border to Orange County and buy and save 3%." That could be a behavioral shift for big-ticket purchases. That’s something retail and furniture businesses in the northern part of the Valley need to take seriously.
What It Means for Your Business
1. Update your POS system before October 1.
If your point-of-sale system calculates sales tax automatically, confirm with your software provider that the October 1 rate update will be applied correctly. Most major POS platforms push rate updates automatically, but verify once it’s Oct 1. Collecting the wrong rate and filing incorrectly creates a compliance liability. It doesn’t matter if the error isn't intentional.
2. Know your rate. It depends on your exact address.
California uses destination-based sourcing for district taxes, meaning the rate that applies is based on where the sale occurs or where goods are delivered. It’s not just your city. Two businesses on the same street can have different obligations if they fall in different taxing districts. The CDTFA's address lookup tool at cdtfa.ca.gov lets you find the exact rate for your location.
3. If you sell online and ship within California, destination rates apply.
If you deliver goods to customers in Burbank, Palmdale, or other LA County cities, you collect at the buyer's address rate, not your store's rate. After October 1, those destination rates go up. Update your shipping rate tables accordingly.
4. Check your filing frequency.
The CDTFA assigns filing frequencies. We’re talking monthly, quarterly, or annual all based on your estimated sales tax liability. If your business has grown, a higher rate means higher liability, which could push you into a more frequent filing schedule. Filing on the wrong schedule generates penalties even when the tax itself is correct.
5. Watch Q4 cash flow.
A rate increase in Q4 means your sales tax remittance for October–December will be higher than the same quarter last year. Plan for it. Businesses that don't separate sales tax from operating cash sometimes get caught short at filing time.
What's Exempt from Sales Tax in California?
Not everything gets more expensive on October 1. California exempts several categories from sales tax:
Groceries and unprepared food — exempt
Prescription medications — exempt
Diapers and menstrual products — exempt
Most services — generally not subject to sales tax
Prepared food sold for immediate consumption (restaurant meals, hot food at a deli) is taxable. If your business straddles taxable and exempt sales, make sure your POS is categorizing correctly as miscategorization is one of the most common audit triggers. (CDTFA, California Sales Tax Exemptions)
The Big Picture for LA Business Owners
Sales tax compliance is one of those things that runs in the background… until it doesn't. An incorrect rate, a missed filing, or a miscategorized product can result in penalties of up to 100% of the unpaid tax plus daily interest, with the seller bearing the liability, not the buyer.
If you haven't had your sales tax setup reviewed recently o especially if your business has grown, added new product lines, or started shipping to customers in other cities then October 1 is a good reason to do it.
At The Tax Shack, we work with LA business owners year-round on exactly this kind of compliance. Stop by our Los Angeles location or give us a call before the rate change hits.
Quick-Answer FAQ
When does the Measure ER sales tax increase take effect? October 1, 2026. The rate applies to all taxable sales within Los Angeles County from that date forward.
What will the sales tax rate be in Los Angeles after October 1? The LA County baseline moves from 9.75% to 10.25%. Cities with their own local district taxes will be higher, e.g. Burbank approximately 11%, Palmdale and Lancaster approximately 11.75%, with some areas approaching 12%. Verify your exact rate at cdtfa.ca.gov.
Does Measure ER apply to groceries? No. Unprepared food and groceries are exempt from California sales tax. The increase applies to taxable purchases like electronics, furniture, vehicles, clothing, prepared food, and most retail goods.
How do I find my exact sales tax rate? Use the CDTFA's address lookup tool at cdtfa.ca.gov. Rates vary by exact address within cities and counties.
When does Measure ER expire? The tax is set to expire in 2031.
What happens if I collect the wrong sales tax rate? The seller bears the liability, not the buyer. Under-collection penalties can reach 100% of the unpaid tax plus daily interest. Update your POS system before October 1 and verify your rate against the CDTFA database.
Sources: The National Desk, "Los Angeles County voters pass sales tax increase to 10.25%," June 29, 2026; California Department of Tax and Fee Administration (CDTFA); SalesTaxHandbook, California Sales Tax Rates 2026; Prophit.ai, Burbank CA Sales Tax Rate 2026.
This post is for general informational purposes. Verify your specific rate and filing obligations directly with the CDTFA or a qualified tax professional.
