Prop F (2020): Business Tax Overhaul

Proposition F was approved by San Francisco voters on November 3, 2020 and became effective January 1, 2021. Proposition F eliminated the City’s Payroll Expense Tax and gradually raised the Gross Receipts Tax rates across most industries while temporarily lowering those rates for some small businesses in certain industries. Proposition F completed the City’s transition away from payroll taxes.

Overview:

  • Eliminated the Payroll Expense Tax (filed in 2022 for tax year 2021)

  • Increases the Small Business Exemption ceiling to $2 million
  • Decreased the Business Registration Fee for most businesses with San Francisco gross receipts up to $1 million

  • Increased the Business Registration Fee for most businesses with San Francisco gross receipts of $1- $2 million. See more.

  • Modified Gross Receipts Tax Rates. See 2021 rates.

Small Business Exemption:

Proposition F expanded the small businesses exemption ceiling

Proposition F expanded the small business exemption ceiling from $1.2 million to $2 million. For 2021, most businesses other than lessors of residential real estate that had San Francisco gross receipts of $2 million or less:

  • Had to renew their annual Business Registration 
  • Do NOT need to file their Annual Business Tax Return or pay Gross Receipts Tax

View illustration of how Proposition F impacted the small business exemption.

Temporary Gross Receipts Tax Rate Reductions for Certain Industries:

Certain industries hit hard by the coronavirus pandemic and related shutdowns were temporarily be subject to lower gross receipts tax rates than in 2020. Those industries included:

  • Retail Trade;
  • Certain Services;
  • Manufacturing;
  • Food Services;
  • Accommodations;
  • Arts, Entertainment and Recreation

Calculating Quarterly Payments:

Proposition F changed how quarterly payments are calculated

Quarterly estimated payments reflected in our system were based on 2020 Annual Business Tax Return filings and were displayed in the payment portal. Businesses were able to pay the lesser of:

  • The amount displayed in the payment portal; or
  • An amount equal to 25% of your Business Taxes due for 2021, which may be $0.

More detail on how to calculate your estimated payments. 

Small Business Exemption & Payroll Impact*:

Prop F flowchart: before and after

Tax and Fee Rates

Gross Receipts Tax rates vary depending on a business' gross receipts and business activity.

Business Activity

0-$1m

$1-$2.5m

$2.5-$25m

$25m +

Retail Trade; and Certain Services

0.053%

0.070%

0.095%

0.224%

Manufacturing; and Food Services

0.088%

0.144%

0.259%

0.665%

Transportation and Warehousing; Bio-Technology; and Clean Technology0.175%0.287%0.518%0.665%

Accommodations; and Arts Entertainment and Recreation

0.210%

0.228%

0.288%

0.560%

Private Education and Health Services; Administrative and Support Services; and Miscellaneous Business Activities

0.735%

0.770%

0.840%

0.910%

Construction

0.420%

0.490%

0.560%

0.630%

Financial Services; Insurance; Information; and Professional, Scientific and Technical Services

0.560%

0.644%

0.714%

0.784%

Utilities0.420%0.455%0.455%0.560%
Wholesale Trade0.105%0.140%0.189%0.224%
     
 0-$1m$1-$5m$5-$25m$25m +
Real Estate and Rental and Leasing Services0.399%0.399%0.420%0.420%

 

Business Registration Fees for new businesses are based on San Francisco gross receipts or payroll expense for the current calendar year, and the business activity types selected. Use Schedule B if your business consists solely of the business activities of Certain Services (e.g. Repair/Maintenance, Personal/Laundry, Civic Orgs), Retail Trade, and/or Wholesale Trade (described on page 1 of the Application).  If your business does anything else, use Schedule A.

Business Registration Fees for the registration year beginning July 1, 2021 and ending June 30, 2022.

2020 San Francisco Gross ReceiptsSchedule ASchedule BState Fee
$0 to $100,000$52$43$4
$100,000.01 to $250,000$86$72$4
$250,000.01 to $500,000$144$115$4
$500,000.01 to $750,000$288$230$4
$750,000.01 to $1,000,000$403$345$4
$1,000,000.01 to $1,500,000$575$475$4
$1,500,000.01 to $2,000,000$805$665$4
$2,000,000.01 to $2,500,000$345$230$4
$2,500,000.01 to $7,500,000$575$460$4
$7,500,000.01 to $15,000,000$1,725$1,294$4
$15,000,000.01 to $25,000,000$5,751$4,313$4
$25,000,000.01 to $50,000,000$14,379$8,627$4
$50,000,000.01 to $100,000,000$25,882$17,255$4
$100,000,000.01 to $200,000,000$34,510$23,006$4
$200,000,000.01 and over$40,261$34,510$4

 

For businesses that qualify as Administrative Offices, the following Business Registration Fees apply for the registration year ending June 30.

2020 San Francisco Payroll Expense

2021 AOT Rate

State Fee

$0 to $2,500,000

$17,255

$4

$2,500,000.01 to $25,000,000

$28,758

$4

$25,000,000.01 or more

$40,261

$4

Most businesses with San Francisco Gross Receipts up to $1m:
Registration Fee reduction (approximately 50%) depending on the business' Business Activities

Most Businesses with San Francisco Gross Receipts between $1-$1.5m:
Registration Fee increase of $230 or $245 depending on the business' Business Activities

Most Businesses with San Francisco Gross Receipts between $1.5-$2m:
Registration Fee increase of $435 or $460 depending on the business' Business Activities

Gross receipts rates 2020-2024

* Rates approved by Proposition F and subsequently updated by ordinance (July 2023). The gross receipts tax is generally progressive, with rates that increase by tiers, depending on the amount of gross receipts attributable to the City. This table shows the range of gross receipts tax rates from the lowest tier to the highest tier within each business activity.                     

** Per the Controller’s Certification, the gross receipts threshold for the 2023 tax year was not met, so  2022 rates  also apply to the 2023 tax year. The table is updated to reflect this. If the gross receipts threshold for the 2024 tax year is not met, the rates shown in the "Tax Year 2024" will be updated to reflect the alternate rates outlined Proposition F. The gross receipts threshold for the 2023 tax year is met if total gross receipts attributable to the City for the 2021 tax year equals or exceeds 90% of the total gross receipts attributable to the City for the 2019 tax year. The gross receipts threshold for the 2024 tax year is met if total gross receipts attributable to the City for the 2022 tax year equals or exceeds 95% of the total gross receipts attributable to the City for the 2019 tax year.

*** The gross receipts tax rate applicable to taxable gross receipts in excess of $25,000,000 for the business activities of real estate and rental and leasing services would have increased to 0.325% beginning in tax year 2021 if Proposition F had not passed.

Additional Information

Full text of Proposition F is available here

Need Further Assistance?

Visit our Help Center to submit a question.  Questions submitted before 7:00 pm will receive a response on the SAME DAY. Questions submitted after 7:00 pm will receive a response by the next business day.