New California Excise Tax On Guns & Ammunition

In September 2023, California introduced a new excise tax on guns and ammunition under Assembly Bill 28, signed into law by Governor Gavin Newsom. This tax, which is set to take effect on July 1, 2024, will apply an 11% tax to the gross receipts from retail sales of ammunition, firearms, and firearm precursor parts in the state. The revenue generated by this tax will be allocated to a newly established Gun Violence Prevention and School Safety Fund.

The legislation includes certain exemptions to this tax. For example, sales to active or retired peace officers, or law enforcement agencies employing such officers, are exempt. Additionally, any licensed firearms dealer, firearms manufacturer, or ammunition vendor whose total gross receipts from the retail sales of firearms, firearm precursor parts, or ammunition is less than $5,000 in any quarterly period is also exempt from this tax.

California's new gun tax mirrors the federal firearms and ammunition excise tax (FAET), which has been in place since 1919 and administered by the Alcohol and Tobacco Tax and Trade Bureau. The FAET imposes a 10% tax on the manufacturer's price for pistols and revolvers and 11% for other portable weapons, shells, and cartridges.

The California Department of Tax and Fee Administration (CDTFA) will be responsible for administering the new gun tax. This will include quarterly remittance of taxes and electronic filing of tax returns. The California Department of Justice (DOJ) will also provide the CDTFA with the names and business locations of all licensed ammunition vendors and firearms dealers and manufacturers in the state.

California is the first state in the U.S. to introduce a statewide excise tax on guns and ammunition. This is in contrast to general sales and use tax on guns and ammunition, which is common in states with a general sales tax. Other states, like Alabama and Pennsylvania, have also implemented specific fees or taxes related to firearms and ammunition.