California’s New Gun and Ammunition Tax

California has implemented a statewide excise tax on the sale of firearms, firearm precursor parts, and ammunition. Established by Assembly Bill 28, also known as the Gun Violence Prevention and School Safety Act, the tax became effective on July 1, 2024. This tax is levied on retailers at the point of sale and is separate from any other existing federal or state taxes.

Scope of the California Gun and Ammunition Tax

The tax applies to the retail sale of three categories of products. The first is firearms, including handguns, rifles, and shotguns. The second is “firearm precursor parts,” which are components used to build a firearm. The third category is ammunition, defined as projectiles designed to be fired from a firearm.

Exemptions from the Tax

Certain sales and retailers are exempt from the 11% excise tax. The law specifies that sales made to any active or retired peace officer or to a law enforcement agency are not subject to the tax. Additionally, the tax does not apply to retailers whose total gross receipts from the sales of firearms, precursor parts, and ammunition are less than $5,000 in any quarterly period.

Calculating the Tax Amount

The tax is calculated at a rate of 11% of the gross receipts from a retail sale, which is the item’s sales price before other taxes are applied. This excise tax is applied before the standard state and local sales tax. First, the 11% excise tax is added to the item’s price, and then the applicable sales tax is calculated on this new, higher total. For example, on a $500 firearm, the 11% excise tax is $55, bringing the subtotal to $555. The standard sales tax is then calculated on this $555 amount.

Retailer Collection and Remittance Responsibilities

Retailers of firearms and ammunition must register with the California Department of Tax and Fee Administration (CDTFA). This involves obtaining a specific certificate for this excise tax, separate from a standard seller’s permit. Retailers must file regular tax returns with the CDTFA, typically on a quarterly basis, to report their total gross receipts from taxable sales and the amount of excise tax collected. The collected funds must then be remitted to the state. The law also mandates that retailers maintain detailed records of all sales subject to the tax for inspection.

Allocation of Tax Revenue

Revenue from the 11% excise tax is deposited into the Gun Violence Prevention and School Safety Fund. The funds are earmarked for programs aimed at addressing gun violence and improving safety. A significant portion of the revenue supports the California Violence Intervention and Prevention (CalVIP) Grant Program, which funds community-based violence reduction efforts. Money is also allocated to the California Department of Education for enhancing school safety, including physical security improvements and mental health services. Other designated uses include programs that support victims of gun violence and firearm relinquishment initiatives.