California Governor Gavin Newsom signed the state’s 2026-27 budget package, including S.B. 122, Chapter 23, which expands the state’s sales and use tax treatment of digital products (defined in S.B. 122 as prewritten computer software transferred on tangible storage media, transferred electronically, or accessed remotely). The enacted language reaches Software-as-a-Service (SaaS) and cloud-based software access because it covers remotely accessed prewritten computer software and provides that the relevant exemption does not apply to the right to use provider software running on cloud infrastructure or to access that software through a web browser or program interface. The new rules become effective January 1, 2027, and apply regardless of how the prewritten software is delivered to the purchaser, including by physical media, electronic transfer, or remote access through the internet.

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