The California Department of Tax and Fee Administration (CDTFA) has issued guidance to registered fuel retailers who may not have properly claimed the California partial sales and use tax exemption for diesel fuel. Effective October 1, 2022 through September 30, 2023, California is providing a 3.9375% partial sales and use tax exemption on the sale, storage, use, or other consumption of diesel fuel.
The CDTFA encourages registered fuel retailers that did not claim the partial exemption (but should have) to amend their returns for Q4 2022 and Q1 2023 if applicable. The total tax on diesel fuel when the exemption is claimed is 9.0625% plus applicable district taxes. When used off road, the total sales tax on dyed diesel fuel is 3.3125% plus applicable district taxes.
The following explains how diesel fuel is taxed from October 1, 2022 through September 30, 2023:
To claim the partial tax exemption when filing online:
(Special Notice L-898, California Department of Tax and Fee Administration, April 2023)