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.
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.
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.
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.
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:
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.
| 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 |
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.
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.
| 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 | 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 Activity | 0-$1m | $1-$2.5m | $2.5-$25m | $25m + |
| Retail Trade; and Certain Services | 0.053% | 0.070% | 0.095% | 0.224% |
| Wholesale Trade | 0.105% | 0.140% | 0.189% | 0.224% |
| Manufacturing; and Food Services | 0.088% | 0.144% | 0.259% | 0.665% |
| Transportation and Warehousing; and Clean Technology | 0.175% | 0.287% | 0.518% | 0.665% |
| Biotechnology | 0.188% | 0.308% | 0.555% | 0.713% |
| Information | 0.579% | 0.675% | 0.770% | 0.855% |
| Accommodations; and Arts, Entertainment, and Recreation | 0.210% | 0.228% | 0.228% | 0.560% |
| Utilities | 0.450% | 0.488% | 0.488% | 0.600% |
| Private Education and Health Services; and Administrative and Support Services | 0.788% | 0.825% | 0.900% | 0.975% |
| Miscellaneous Business Activities | 0.814% | 0.853% | 0.930% | 1.008% |
| Construction | 0.420% | 0.490% | 0.560% | 0.630% |
| Insurance | 0.600% | 0.690% | 0.765% | 0.840% |
| Financial Services; and Professional, Scientific, and Technical Services | 0.620% | 0.713% | 0.791% | 0.868% |
| 0-$1m | $1-$5m | $5-$25m | $25m + | |
| Real Estate and Rental and Leasing Services | 0.428% | 0.428% | 0.450% | 0.450% |
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 |
|
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.
- Recommended Reforms to the Business Tax System
- Report on vulnerabilities of San Francisco’s business tax system in the context of our post-pandemic recovery
| Business Activity | <$1M | $1-2.5M | $2.5-$25M | $25M+ |
| Accommodations / Arts etc. | 225 | 46 | 113 | 30 |
| Administrative and Support Services | 150 | 46 | 74 | 21 |
| Biotechnology / Clean Technology / Not Listed | 555 | 99 | 148 | 11 |
| Construction | 428 | 296 | 428 | 40 |
| Financial Services / Insurance | 278 | 154 | 382 | 131 |
| Food Services / Certain Services | 479 | 366 | 460 | 10 |
| Information | 240 | 121 | 281 | 109 |
| Manufacturing | 96 | 51 | 99 | 14 |
| Private Education and Health Services | 136 | 82 | 168 | 13 |
| Professional, Scientific, and Technical Services | 842 | 471 | 819 | 151 |
| Real Estate and Rental and Leasing Services | 567 | 214 | 399 | 82 |
| Retail Trade | 390 | 227 | 551 | 92 |
| Transportation and Warehousing / Utilities | 59 | 31 | 54 | 15 |
| Wholesale Trade | 164 | 96 | 249 | 60 |
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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