Is buying out-of-state tax-free?

Short answer is NO.

Sales tax is applied to ” tangible property”, anything you can see, touch, feel, weight, measure, etc. Californians do not pay sales tax on services.

When a consumer pays tax to a retailer- it’s a sales tax, when consumer pays tax directly to the state, sales tax becomes “use tax“. Both taxes have the same rate, which is 7.5% in California as of January 1,  2013 to December 31, 2016. One should calculate and pay use tax when tangible  items purchased from out-of-state retailers. Use tax has been in effect in California since 1935, but many people are not aware of it.

Your tax professional can help to chose which method to use when reporting use tax .