Unfortunately, yes. California really sucks in that regard.
Last time I upgraded, a $199 phone was $250 out of pocket because of sales tax.

On Dec 10, 2013, at 1:18 AM, Kevin Callahan <[email protected]> wrote:

> A friend texted me from an AT&T store in California as he was just about to 
> buy an iPhone 5S 32GB  *upgrade* at $299 for his daughter.
> AT&T was charging $68 in tax for the $299 phone.  They said that they tax on 
> the "retail" price, not on the upgrade price.   
> 
> I checked my receipt for my iPhone 5S 64GB I bought via the Apple Store 
> online back in October (I'm in Wash. state) and I paid just $37.91 in tax.
> 
> Is it true that in California you pay tax on the retail price when upgrading? 
>  And is this also true when ordering online via the Apple Store if you are a 
> California resident?
> 
> -K
> 
> 
> 
> 
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Aron S. Spencer

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