Gross Receipts Tax Overview

The San Francisco Gross Receipts Tax is a local business tax approved by San Francisco voters in 2012 and most recently updated when Proposition F was approved by voters in 2020. This page provides an overview of the Gross Receipts Tax and demonstrates how it is applied to hypothetical businesses.

The Basics

  • Gross receipts refers to the total revenue and other receipts of a business, including sales, services, rentals, and other revenue and receipts.
  • Small businesses are exempt from filing and paying the Tax. For 2022, the small business exemption for most businesses was $2,090,000 or less in San Francisco gross receipts. This amount is updated each year. 

  • Certain non-profits, banks, and insurance companies are exempt from filing and paying the Tax. 

  • Businesses file Gross Receipts Tax annually with a deadline of February 28th each year. 

  • Approximately 15,000 businesses filed in 2022, and the Tax generates about $800 million per year in revenue for the City.

Learn More

How the Tax is Calculated

 

  • Tax rates are typically determined based on a business' San Francisco gross receipts and business activities.
  • Businesses must determine what type of business activities apply to them from a list of options provided. For example, a restaurant may select “Food Services” and a clothing store may select “Retail Trade” as their business activity. 
  • Gross Receipts Tax rates vary depending on a business' gross receipts and business activity.

Business Activities & Rates

Businesses with Gross Receipts Only in San Francisco

 

  • If a business operates only within San Francisco and generates all its gross receipts from business within the city, all its gross receipts are counted when calculating the Gross Receipts Tax. 
  • The tax rates are based on those gross receipts and their business activity. 

Business Scenario

Businesses with Gross Receipts Within and Outside of San Francisco

Calculating the Tax becomes more complex when a business has gross receipts from both inside and outside of San Francisco.

  • These businesses are generally larger and may have more complex business structures.
  • A calculation method called allocation and apportionment determines the portion of gross receipts that should be counted for San Francisco.
  • Scroll down to learn more about Allocation and Apportionment.

Business Scenarios 

Allocation and Apportionment

Businesses with gross receipts within and outside of San Francisco determine their San Francisco gross receipts generally using one or both of allocation and/or apportionment, as dictated by their business activities.  Some business activities use only allocation (e.g., Real Estate and Rental and Leasing Services); some business activities use only apportionment (e.g., Financial Services); and some business activities use 50% allocation and 50% apportionment (e.g., Retail Trade). View business scenarios to see how this works. 

Allocation:  

Gross receipts generally are allocated to San Francisco if the property sold is shipped or delivered to a purchaser in San Francisco, if the benefit of the services generating the gross receipts is received in San Francisco, if the intangible property generating the gross receipts is used in the City, or if the property generating the gross receipts is located in San Francisco.

Apportionment:

Gross receipts generally are apportioned to San Francisco by multiplying total gross receipts by the portion of the business's total payroll in San Francisco divided by the business’s total payroll.

Hypothetical Business Scenarios:

View the video to understand how the Gross Receipts Tax is calculated for various types of businesses. Scroll down to review the Gross Receipts Tax calculations for hypothetical businesses outlined in the video.

Business with gross receipts only in San Francisco

Consider a restaurant operating solely in San Francisco with all its gross receipts from business within the City. All gross receipts will be counted when calculating the Gross Receipts Tax.

Restaurant

Business activity: Food Services

Total San Francisco gross receipts = $3 million

Apply the appropriate tax rates to the $3 million in San Francisco gross receipts and the resulting amount represents the Gross Receipts Tax owed by the business.


Tax Brackets

2022 Tax Rate (Food Services)

Gross Receipts of Business

Tax Owed

 ($0 - $1M)

0.088%

$1M

$880

 ($1,000,001 - $2.5M)

0.144%

$1.5M

$2,160

 ($2,500,001.00 - $25M)

0.259%

$500K

$1,295

Total

 

$3 million

$4,335

 

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Restaurant continued

The tax has a progressive structure, as demonstrated below using the data from the left table. Each step of the stairs has a different tax rate. A portion of receipts are left on each step and taxed at that tax bracket’s rate. If the receipts exceed the threshold of that step, the remaining amount will progress to the next step and be taxed at the next highest rate.

Tax rates as stair steps

 

Total Gross Receipts Tax  = $4,335

Businesses with gross receipts within and outside of San Francisco

Consider two businesses that have the same overall gross receipts and payroll numbers; a financial advisor and a clothing retailer. Also assume that the clothing retailer has sales allocated to San Francisco. The financial advisor will owe more than the clothing retailer because of policy choices made by City leaders and voters.  For example, retail businesses have higher fixed costs like property and labor, so they have a lower tax rate than financial services businesses. And each has a different method for calculating their San Francisco gross receipts. 

Financial Advisor

Business Activity: Financial Services

  • $30 million in total gross receipts (within and outside of San Francisco)

  • $10 million in total payroll (within and outside of San Francisco)

  • $1 million in San Francisco payroll



Calculate the San Francisco gross receipts:

For Financial Services, San Francisco gross receipts are determined 100% based on apportionment:

  • $1 million in San Francisco payroll is 10% of $10 million in total payroll, which means the business has a 10% apportionment factor.
  • Multiply the 10% by the $30 million in total gross receipts, which equals $3 million.

 

Total San Francisco gross receipts = $3 million

Apply the appropriate tax rates to the $3 million in San Francisco gross receipts and the resulting amount represents the Gross Receipts Tax owed by the business.


Tax Brackets

2022 Tax Rate (Financial Services)

Gross Receipts of Business

Tax Owed

 ($0 - $1M)

0.600%

$1M

$6,000

 ($1,000,001 - $2.5M)

0.690%

$1.5M

$10,350

 ($2,500,001.00 - $25M)

0.765%

$500K

$3,825

Total

 

$3 million

$20,175

 

Total Gross Receipts Tax  = $20,175

Clothing Retailer

Business Activity: Retail Trade

  • $30 million in total gross receipts (within and outside of San Francisco)
  • $10 million in total payroll (within and outside of San Francisco)
  • $1 million in San Francisco payroll
  • $5 million in sales made within San Francisco 


Calculate the San Francisco gross receipts:

For Retail Trade, San Francisco gross receipts are determined 50% based on apportionment and 50% based on allocation:

  • Apportioned San Francisco Receipts: ($3 million apportioned to San Francisco x 50%) = $1.5 million
  • Allocated San Francisco Receipts: ($5 million in sales within San Francisco x 50%) = $2.5 million
  • Combine the two: $1.5 million + $2.5 million = $4 million

Total San Francisco gross receipts = $4 million

Apply the appropriate tax rates to the $4 million in San Francisco gross receipts and the resulting amount represents the Gross Receipts Tax owed by the business.

Tax Brackets

2022 Tax Rate
(Retail Trade)

Gross Receipts of Business

Tax Owed

 ($0 - $1M)

0.053%

$1M

$530

 ($1,000,001 - $2.5M)

0.070%

$1.5M

$1,050

 ($2,500,001.00 - $25M)

0.095%

$1.5M

$1,425

Total

 

$4 million

$3,005

 

Total Gross Receipts Tax  = $3,005

Business Activities and Rates

  • Accommodations
  • Administrative and Support Services
  • Arts, Entertainment, and Recreation
  • Biotechnology
  • Certain Services
  • Clean Technology
  • Construction
  • Financial Services
  • Food Services
  • Information
  • Insurance
  • Manufacturing
  • Miscellaneous
  • Private Education and Health Services
  • Professional, Scientific, and Technical Services
  • Real Estate and Rental and Leasing Services
  • Retail Trade
  • Transportation and Warehousing
  • Utilities
  • Wholesale Trade

Gross Receipts Tax rates vary depending on a business' gross receipts and business activity. The tax is progressive, which is demonstrated in the restaurant example above. 

Business Activity0-$1m$1-$2.5m$2.5-$25m$25m +
Retail Trade; and Certain Services0.053%0.070%0.095%0.224%
Wholesale Trade0.105%0.140%0.189%0.224%
Manufacturing; and Food Services0.088%0.144%0.259%0.665%
Transportation and Warehousing; and Clean Technology0.175%0.287%0.518%0.665%
Biotechnology0.181%0.297%0.537%0.689%
Information0.573%0.665%0.751%0.832%
Accommodations; and Arts, Entertainment, and Recreation0.210%0.228%0.228%0.560%
Utilities0.435%0.471%0.471%0.580%
Private Education and Health Services; and Administrative and Support Services0.761%0.798%0.870%0.943%
Miscellaneous Business Activities0.788%0.825%0.900%0.975%
Construction0.420%0.490%0.560%0.630%
Insurance0.580%0.667%0.740%0.812%
Financial Services; and Professional, Scientific, and Technical Services0.600%0.690%0.765%0.840%
 0-$1m$1-$5m$5-$25m$25m +
Real Estate and Rental and Leasing Services0.413%0.413%0.435%

0.435%

Businesses with gross receipts from business activities both within and outside San Francisco must generally allocate and/or apportion gross receipts. This table indicates the applicable apportionment and/or allocation methodology for each business activity. 

Business Activity

Calculation Method

Retail Trade; Wholesale Trade; and Certain Services

Manufacturing; Transportation and Warehousing; Information; Bio-Technology; Clean Technology; and Food Services

This section is 50% allocation and 50% based on payroll apportionment (Section 953.2(g))

Accommodations; Utilities; and Arts Entertainment and Recreation

  • Accommodations is receipts derived from or related to properties located or used in the City (Section 953.3(e))
  • Utilities is 50% allocation and 50% based on payroll apportionment (Section 953.3(f))
  • Arts, Entertainment and Recreation is based on payroll apportionment (Section 953.3(g))

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

This section is based on payroll apportionment  (Section 953.4(d))

Construction

This Section is 50% allocation and 50% based on payroll apportionment (Section 953.5(c)) 

San Francisco gross receipts may be reduced by amounts paid in the tax year to a subcontractor possessing a valid business registration certificate with the City to the extent those amounts were included in the amount your business allocated to the City under Section 956.1. Persons must submit itemized deduction list in order to claim. (Section 953.5(c))

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

This section is based on payroll apportionment (Section 953.6(e))

Real Estate and Rental and Leasing Services

This section is receipts derived from or related to properties located or used in the City. (Section 953.7 (c))

 

More Information

San Francisco's business tax structure is facing new challenges and is in need of reform. Mayor Breed and Board President Peskin asked the Treasurer, Controller, and Chief Economist to review the City's current business tax structure and develop recommendations for needed reforms. Learn more at the project's website.

Business Activity<$1M$1-2.5M$2.5-$25M$25M+ 
Accommodations / Arts etc.2254611330
Administrative and Support Services150467421
Biotechnology / Clean Technology / Not Listed5559914811
Construction42829642840
Financial Services  / Insurance278154382131
Food Services / Certain Services47936646010
Information240121281109
Manufacturing96519914
Private Education and Health Services1368216813
Professional, Scientific, and Technical Services842471819151
Real Estate and Rental and Leasing Services56721439982
Retail Trade39022755192
Transportation and Warehousing / Utilities59315415
Wholesale Trade1649624960

Before 2012

San Francisco levied a 1.5% tax on the payroll expense of larger businesses in the city. San Francisco was the only city in California to base its business tax on payroll expense. Under the old system, businesses with more than $250,000 in payroll expense paid a flat 1.5% rate, and business registration fee revenue was comparatively small.

2012

Proposition E was approved by San Francisco voters on November 6, 2012. Voters approved a shift from the payroll expense tax to one based on gross receipts. The change was intended to promote economic growth, greater revenue stability, and better equity in the business tax system. The new gross receipts tax system introduced a progressive rate structure, and a larger, progressive business registration fee. 

2020

Proposition F was approved by San Francisco voters on November 2, 2020 and became effective January 1, 2021. Proposition F completed the City’s transition from a Payroll Expense Tax to a Gross Receipts Tax, a decision initially approved by the voters in 2012 (Proposition E). Proposition F fully repealed the Payroll Expense Tax and increased the Gross Receipts Tax rates across most industries while providing relief to certain industries and small businesses. 

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