What the Santa Barbara Sales Tax Increase Means for Nonprofits

Santa Barbara nonprofits might be asking a simple question right now: “Do we need to worry about the new sales tax increase?”

While donations and grants aren't affected, organizations that hold fundraisers, sell merch or products, or offer ticketed events may need to make a few adjustments. Having the right outsourced accounting partner can make these changes much easier to navigate, and ensure you're staying both compliant and strategic as you grow.

Here’s a clear, nonprofit-specific breakdown of what’s changed—and what to do next to stay compliant and confident.

Quick Recap: What Changed

• Santa Barbara’s sales tax increased from 8.75% to 9.25% as of April 1, 2025

• This makes it the highest sales tax rate in Santa Barbara County, and ties Oxnard for the highest rate in the Tri-County region

• The change was approved by voters in November 2024 as Measure I, which passed with 62.9% support. The revenue will support core city services like housing programs, public safety, homelessness prevention, parks, and libraries

Does This Affect My Nonprofit?

It depends on how your organization generates revenue. The good news is that most charitable income remains untouched. When in doubt, consult the California Department of Tax and Fee Administration (the CDTFA) guidelines or your accountant to stay compliant.

• Not affected: 
  • Donations and grants
  • Program services that are not taxable
  • Essentials like groceries, prescription medicine, diapers, and feminine hygiene products

• Possibly affected:
  

  • Events— Taxability depends on the frequency and your nonprofit's specific tax-exempt status under CDFTA rules (e.g., Regulation 1597)

  • Retail sales— Any sales made by a nonprofit, like merchandise or food and drink, are generally taxable for nonprofits, just as they are with for-profit businesses

If your nonprofit engages in any commercial activity, even occasionally, this tax increase could impact you.

What to Do if You Collect Sales Tax

The new rate of 9.25% must be reflected in all applicable transactions starting April 1.

Here are a few steps to take:

• Update systems: Make sure your point-of-sale software, online ticketing platforms, and accounting tools are updated to reflect the new rate

• Train your team: Ensure that staff and volunteers who manage events, sales, or finance know how and when to apply the tax correctly

How Accountix Can Help

We work with many nonprofits and understand that you're often juggling both mission and compliance.

Here's how we can help:

• Review your sales tax exposure based on your revenue streams
• Update your POS or accounting systems to reflect the new rate
• Train your admin staff or volunteers on how to apply the correct tax rate
• Help you prepare documentation and reports that keep your board informed and your auditors happy

Final Thoughts

Sales tax changes aren’t flashy—but they matter, especially when your nonprofit blends charitable work with revenue-generating activities.  Making a few proactive changes now can help you avoid confusion later.

Not sure if this applies to you? We’re happy to take a look.

Reach out to your Accountix contact or schedule a quick consultation with our team.