Saastr · 5 September 2026 · Industry Analysis

California Is Taxing SaaS and AI Tools and Is About to Make Your Software 8-10% More Expensive. Here’s What SB 122 Does to Buyers and Vendors

Jason Lemkin, GP @ SaaStr

California's SB 122 taxes SaaS and digital products as of January 1, 2027, adding 8–10% to software costs for buyers and imposing new compliance burdens on vendors; key exemptions include IaaS/PaaS and custom software, while AI API pricing and hybrid platforms remain unresolved.

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Topics: Enterprise Software · AI (Horizontal)

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