Ever since “working in the cloud” became a thing, we have all gotten used to paying subscriptions for online software of every kind. Adobe tools, QuickBooks Online, Commerce7, payroll systems, email marketing platforms, inventory tools, scheduling software, and all of the apps that connect to them have become part of the cost of doing business in the wine industry. 

And those subscription costs seem to get a little higher every year.

Well, California is about to make not only the cost, but also the complexity, go up.

Beginning January 1, 2027, California will impose sales tax on many digital products, including prewritten software and Software as a Service, better known as SaaS. That means many of the online tools wineries rely on every day will soon come with something new on the bill: California sales tax.

How Much More Will It Cost?

The answer will depend partly on your local sales tax rate.

If your winery spends $50,000 a year on taxable software subscriptions and your applicable sales tax rate is around 8 percent, that's roughly another $4,000 a year.

And $50,000 in annual software costs may not be as difficult to reach as you think.

Add up what you spend on accounting, payroll, point of sale, wine club management, CRM, inventory, compliance, email marketing, design tools, Microsoft 365, Adobe, scheduling, reporting and analytics, plus all those smaller apps that connect one system to another.

It adds up.

Consider Renewing in 2026

Here's one thing worth doing before the end of the year.

If you have software subscriptions coming up for renewal and the vendor offers an annual payment option, consider whether it makes sense to renew and pay during 2026 rather than waiting until 2027.

The new California tax takes effect January 1, 2027, and the timing of subscription payments can matter. Paying an annual subscription before the new rules take effect could potentially postpone the additional tax until your next renewal cycle.

Don't buy software you don't need just to save sales tax. But if you know you're going to keep using a system anyway, take a look at your renewal date and payment options before December 31.

Can I Just Change My Billing Address?

Not so fast. 

Your billing address is important because it is generally the first address a software provider will use in determining where the purchase is taxable and what tax rate applies.

But changing the billing address to your owner's vacation home in Nevada isn't a tax strategy if the software is actually being used at your winery in California.

If California sales tax isn't collected on something that is actually taxable here, the obligation doesn't necessarily disappear. The winery could instead become responsible for California use tax.

So make sure the billing addresses associated with your software subscriptions are accurate.

What If We Have Employees in Other States?

Now it gets more interesting.

If you have employees working remotely outside California who use some of the same cloud based software as your California team, there may be opportunities to avoid California tax on the portion of certain subscriptions actually used outside the state.

The details of how businesses will document and claim these allocations are still developing. Software providers will also need to determine how they will collect information from their customers and administer the new California rules.

For now, start gathering information. Make a list of your significant software subscriptions, who uses them and where those people actually work. If software vendors provide a process for documenting multistate use, you'll already have the information you need.

What Else Can Winery Owners Do Now?

You don't need to become a sales tax expert before 2027, but you should do a little homework before the end of 2026:

• Review your recurring software subscriptions and what you are spending on them.

• Look for subscriptions that can be renewed and paid during 2026.

• Confirm that the billing address associated with each account is correct.

• If you have employees outside California, identify which software platforms they use and where those employees are actually working.

• Finally, watch for communications from your software providers as they prepare to implement California's new requirements.

Software subscriptions have become a fact of life for wineries and the people who work for them. Beginning in 2027, California sales tax may become one more subscription cost to add to the list.

A little planning before the end of 2026 could help keep that cost from being any higher than it needs to be.