The recent Grand Opening of the Tesla dealership and service center in Los Gatos sparked questions—including from former mayor Sandy Decker—about just how much of the company’s sales revenue would remain in the community.
So, the Los Gatan reached out to Town’s financial planners to dig into how exactly that will work.
According to the Town, while the picture is a nuanced one, for those planning to purchase a Tesla, the upshot is simple: “Buy local and register local.”
“In California, all sales are taxable unless a specific exemption applies,” a Town spokesperson said in an email response. “Taxable sales generally involve tangible personal property, meaning items that can be seen, weighed, measured, felt, or touched. Vehicles and most vehicle parts fall into this category. When a vehicle is purchased, the allocation of sales tax depends on both the location of the dealership and the address where the vehicle is registered for use.”
The base state sales tax rate includes a 1% local portion (Bradley-Burns Uniform Local Tax), which goes to the jurisdiction where the sale occurs, the Town rep explained. Additional district taxes (such as voter measures), are also sent to the jurisdiction where the vehicle is registered. In Santa Clara County, the base rate is 9.125%, with the Los Gatos rate at 9.25% (due to the Town’s 0.125% local district tax).
Sales tax breakdown:
- If a vehicle is purchased and registered in Los Gatos, the buyer pays 9.25%, and the Town receives 1.125% of the taxable sale price (1% from the Bradley-Burns base allocation and 0.125% from the Town’s district tax).
- If a buyer purchases in Los Gatos but registers the vehicle elsewhere, Los Gatos receives only the 1% local portion, while the district tax portion is distributed to the jurisdiction of registration.
District tax rates:
- Milpitas – 9.375% (district tax 0.25%)
- Campbell – 9.875%
- Los Gatos – 9.25% (district tax 0.125%)
So, for example, a Milpitas resident buying a car in Los Gatos but registering it in Milpitas pays 9.375%, with Los Gatos receiving 1% and Milpitas receiving 0.25%. A Los Gatos resident purchasing a vehicle in Milpitas and registering it in Los Gatos pays 9.25%, with Milpitas receiving 1% and Los Gatos receiving 0.125%.
“Los Gatos does not have agreements that relinquish its legally entitled sales tax revenues,” the Town rep said. “The key takeaway for residents is: ‘Buy local and register local.’ Doing both keeps the maximum amount of sales tax revenue within Los Gatos, directly supporting Town services and infrastructure.
“It’s also worth noting that while residents pay 9.25% sales tax, only a small portion, approximately 1.125%, returns directly to the Town. This is similar to property tax, where Los Gatos receives about 9.3% of the total property tax collected by the County from residents.”
However, when the Los Gatan asked for projections of how much revenue Tesla will generate to fund Los Gatos operations, the Town declined to share estimates, citing California Department of Tax and Fee Administration regulations. A Tesla sales manager did not respond to a request for comment by deadline.
For specific taxpayer guidance, residents and businesses may contact the California Department of Tax and Fee Administration (CDTFA) at 1-800-400-7115.
