Santa Barbara: Sales Tax Is Going Up—Here's What You Need to Know.

If you're running a business in Santa Barbara, there’s a new number you’ll need to factor into your pricing, systems, and cash flow planning: 9.25%.

That’s the new total sales tax rate, that went into effect on April 1, 2025. It might not sound like much on paper, but half a percentage point can add up fast—especially for high-volume or high-ticket transactions.

Whether you're a retailer, service provider, or nonprofit with taxable sales, understanding how this change impacts your margins, operations, and customers is key. With the right outsourced accounting partner, navigating updates like these becomes simpler—and that's exactly what we're here to help with.

Let’s break it down.

Overview of the Tax Increase

• Effective Date: April 1, 2025

• Rate Change: Increasing from 8.75% to 9.25% 

• Breakdown:

  • California (statewide base): 6.00%

  • Santa Barbara County: 0.25%

  • SB Co. Local Tax: 1.00%

  • SB Co. District Special Tax: 0.50%

• Context: This makes Santa Barbara’s total rate the highest in the county, and tied with Oxnard for the highest in the Tri-County region

• Approval: Passed as Measure I in the November 2024 election, with 62.9% voter support

Why the Increase?

The city is facing a growing gap between revenue and expenses, and this tax bump is part of the solution.

• Revenue Goal: Estimated $15.6M annually

• Deficit Solution: Covers a projected $7M annual budget shortfall

• Funding Priorities:

  • Public safety

  • Affordable housing & homelessness prevention

  • Parks and libraries

• Cost Pressures: Rising pension obligations, salaries, insurance, and infrastructure needs are all squeezing the city budget

Compliance Checklist

Prep your systems now!

• Update Point-of-Sale (POS): Adjust tax settings across your sales and invoicing platforms

• Check with CDTFA: The California Department of Tax and Fee Administration has posted updated guidance to help businesses stay compliant

• Reconcile Accounting Software: Make sure your accounting system (QuickBooks, Xero, etc.) reflects the correct new tax rate for accurate reporting

Exemptions Still Apply

Good news—certain everyday essentials remain untouched by the increase.

• Exempt from Sales Tax:

  • Grocery food

  • Prescription medications

  • Rent and utilities

  • Diapers and feminine hygiene products

• Consumer Behavior Shift? Buyers may hold off on larger purchases or shop out of town to save—anticipating and messaging around these behaviors is key

What Business Owners Should Do Next

Now’s the time to take action—don't wait.

• Update Sales Systems: Work with your IT or software provider now to ensure a seamless switchover

• Train Your Staff: Frontline teams should be ready to explain the change and handle questions

• Communicate with Customers: Use signage, newsletters, or receipts to inform customers about the new rate

How Accountix Can Help

We’re already prepping our clients for the change—here’s how we can help you:

• System Support: We’ll make sure your books and platforms are tax-ready

• Ongoing Advisory: From compliance to customer experience, we’ll help you stay ahead of the curve—so you can stay focused on what you do best

Sales tax increases aren’t fun, but they’re manageable—with the right support.

At Accountix, we know how much the small changes in policy can ripple through your day-to-day operations. If you aren't sure if this applies to your organization, reach out to your Accountix advisor or schedule a quick consultation with our team.

We’ve got your back—because when you’ve got your numbers right, you’ve got this.