Proposition F was approved by San Francisco voters on November 2, 2020 and became effective January 1, 2021. Proposition F fully repealed the Payroll Expense Tax and increased the Gross Receipts Tax rates across most industries while providing relief to certain industries and small businesses.
The Gross Receipts Tax is filed as part of the Annual Business Tax Return.
For 2022, persons other than lessors of residential real estate are required to file a return if in the tax year you were engaged in business in San Francisco were not otherwise exempt and you had more than $2,090,000 in combined taxable San Francisco gross receipts.
Exemption provisions are listed in Section 954. The most common exemption is for certain non-profit organizations exempt from income tax.
Gross receipts means the total amounts received or accrued by a person from whatever source derived, including, but not limited to, amounts derived from sales, services, dealings in property, interest, rent, royalties, dividends, licensing fees, other fees, commissions and distributed amounts from other business entities. Gross receipts include but is not limited to all amounts that constitute gross income for federal income tax purposes. Gross receipts, including advance payments, shall be included in a taxpayer's gross receipts at the time such receipts are recognized as gross income for federal income tax reporting purposes.
For 2022, Gross Receipts Tax rates vary depending on a business' gross receipts and business activity. Use your San Francisco Business Activity, and the SF Gross Receipts Tax Computation Worksheet to determine your San Francisco Gross Receipts Tax obligation.
|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; and Clean Technology||0.175%||0.287%||0.518%||0.665%|
|Accommodations; and Arts, Entertainment, and Recreation||0.210%||0.228%||0.228%||0.560%|
|Private Education and Health Services; and Administrative and Support Services||0.761%||0.798%||0.870%||0.943%|
|Miscellaneous Business Activities||0.788%||0.825%||0.900%||0.975%|
|Financial Services; and Professional, Scientific, and Technical Services||0.600%||0.690%||0.765%||0.840%|
|Real Estate and Rental and Leasing Services||0.413%||0.413%||0.435%|
Taxpayers deriving gross receipts from business activities both within and outside San Francisco must generally allocate and/or apportion gross receipts to San Francisco using rules set forth in Business and Tax Regulations Code. This table indicates the applicable apportionment and/or allocation methodology for each business activity. The Code is based on the 2012 NAICS classifications. For more information on the 2012 NAICS codes, go to www.census.gov/eos/www/naics.
Retail Trade; Wholesale Trade; and Certain Services
Apportionment for Retail Trade and Wholesale Trade is 50% Sale/Use Location and 50% based on payroll (Section 953.1(e)) Apportionment for Certain Services is based on payroll (Section 953.1(f))
Manufacturing; Transportation and Warehousing; Information; Bio-Technology; Clean Technology; and Food Services
Apportionment for this section is 50% sales allocation and 50% based on payroll (Section 953.2(g))
Accommodations; Utilities; and Arts Entertainment and Recreation
Apportionment for Accommodations is receipts derived from or related to properties located or used in the City (Section 953.3(e)) Apportionment for Utilities is 50% Real, Personal, Tangible and Intangible Property and 50% based on payroll (Section 953.3(f)) Apportionment for Arts, Entertainment and Recreation is based on payroll (Section 953.3(g))
Private Education and Health Services; Administrative and Support Services; and Miscellaneous Business Activities
Apportionment for this Section is based on payroll (Section 953.4(d))
Apportionment for this Section is 50% Real, Personal, Tangible and Intangible Property and 50% based on payroll (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 In addition, Real, Personal, Tangible and Intangible Property shall be reduced by the amounts paid to a subcontractor in the City. Person must submit itemized deduction list in order to claim. (Section 953.5(c))
Financial Services; Insurance; and Professional, Scientific and Technical Services
Apportionment for this Section is based on payroll (Section 953.6(e))
Real Estate and Rental and Leasing Services
Apportionment for this Section is receipts derived or related to properties located or used in the City. (Section 953.7 (c))
* 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.
** If the gross receipts threshold for the 2023 tax year is not met, the rates shown in the "Tax Year 2022" column will also apply to the 2023 tax year. If the gross receipts threshold for the 2024 tax year is not met, the rates shown in the "Tax Year 2023" column will also apply to the 2024 tax year (in addition to the 2023 tax year if the gross receipts threshold for the 2023 tax year was met). 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. For the 2025 and subsequent tax years, the tax rates shown in the column "Tax Years 2024 & After" apply irrespective of whether either of the above gross receipts thresholds was met.
*** 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.
Estimated business tax payments are due April 30th, July 31st and October 31st. Residential Landlords with less than $2,090,000 in gross receipts are exempt from estimated quarterly business tax payments and will not receive an estimated business tax payment notice. 2023 estimated business tax amounts due will be payable on the business tax payment portal after March 1, 2023 for businesses that file their 2022 Annual Business Tax Return on or before February 28, 2023. For business that file their 2022 Annual Business Tax Return after March 1, 2023, estimated business tax amounts due will be payable on the business tax payment portal 48 hours after the 2022 Annual Business Tax Return is submitted. Learn more about quarterly estimated payments.
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 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.
Until the passage of Proposition E, 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.
Proposition F was approved by San Francisco voters on November 3, 2020 and became effective January 1, 2021.
Eliminates the Payroll Expense Tax (filed in 2022 for tax year 2021)
- Increases the Small Business Exemption ceiling to $2 million
Decreases the Business Registration Fee for most businesses with San Francisco gross receipts up to $1 million
Increases the Business Registration Fee for most businesses with San Francisco gross receipts of $1- $2 million. See more.
Modifies Gross Receipts Tax Rates. See 2021 rates.
Learn more about how the transition to the new Gross Receipts Tax may impact your taxes.
All persons and their related entities must file a Gross Receipts Tax return on a combined basis, reflecting the gross receipts, and other tax attributes (e.g., credits , payroll for apportionment, etc.) of all related entities. A person is a related entity to a taxpayer if:
- That person and the taxpayer are permitted or required to have their income reflected on the same combined report for California Franchise or Income Tax purposes; or
- That person and one or more other persons (including the taxpayer) derive gross receipts solely from sources within California and their business activities are such that, if conducted both within and outside California, a combined report would be required for California Franchise or Income Tax purposes.
If an entity was a member of your combined group for only a portion of 2021, include that entity in your combined group’s Return for the portion of 2021 that it was a member. For the portion of 2021 that the entity was not a part of your combined group, that entity will have to file separately or as part of another combined group.
If you are currently a non-filing member of a combined group but were a separate entity for a portion of the year, you must file as a separate entity for that portion of 2021 that you were a separate entity engaged in business in San Francisco.
If your combined group for California Franchise or Income Tax purposes includes an entity that is exempt from the Payroll Expense Tax and/or Gross Receipts Tax (e.g., banks or financial corporations exempt from local taxation under Article XIII, Section 27 of the California Constitution and Revenue and Taxation Code section 23182), you should exclude the gross receipts, payroll expense, and other tax attributes of this exempt entity from your combined Return.
To file a Return on behalf of a combined group, you must have authorization to file on behalf of each taxpayer in the combined group. The form for this purpose is the Authorization To Be Included In Combined Filings (Power of Attorney) - Form POA-2. You do not need to submit this form with your Return.
NOTE: Pursuant to Tax Collector Regulation 2014-2, a single-member entity (including a single-member limited liability company) treated as a disregarded entity for federal income tax purposes will be disregarded for purposes of the Gross Receipts Tax and business registration requirements. Each such entity will be treated as a sole proprietorship, branch, or division of its owner. The owner of the disregarded entity will be the registrant and taxpayer for purposes of the Gross Receipts Tax and business registration requirements.
For purposes of the Gross Receipts Tax and Business Registration Fee, a lessor of residential real estate is treated as a separate person with respect to each individual building in which it leases residential real estate units.
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Business and Tax Regulations Code Section 954 excludes from the definition of “gross receipts” any “receipts from business activities if, and only so long as and to the extent that, the City is prohibited from taxing such receipts under the Constitution or laws of the United States or under the Constitution or laws of the State of California.” Thus, to the extent that federal or state law prohibits the City from taxing certain of your gross receipts, you should exclude such receipts from your Gross Receipts Tax base and from the calculation of your Business Registration Fee. However, you are still subject to the Gross Receipts Tax and Business Registration Fee on your gross receipts that are not exempted from local taxation under federal or state law.
The gross receipts tax and business registration fee applies to businesses located in the Presidio (other than those engaged in business in the City as an administrative office, as defined in Business and Tax Regulations Code section 953.8(b) in the same manner as it applies to other businesses operating in San Francisco.
While owned by the City and County of San Francisco, the Airport property is physically located within unincorporated San Mateo County and other cities. Most of the Airport is located in unincorporated San Mateo County, but portions are within the boundaries of surrounding communities, including South San Francisco, San Bruno, Millbrae and Burlingame.
To the extent a Homeowners Association (HOA) is not engaged in business in San Francisco, it is not subject to business registration fees or the Gross Receipts Tax. An HOA will not be considered to be engaging in business in San Francisco if its activities are limited to collecting dues or other remittances from owners to be used for the benefit of those owners and expending those dues and remittances for the benefit of those owners. To the extent the HOA is otherwise engaged in business in San Francisco, the dues or other remittances received from owners for the benefit of those owners will not be considered gross receipts from business activities that are subject to the Gross Receipts Tax.
To the extent that your business is processing a credit card or debit card transaction between third parties, you should not include the full amount of the underlying transaction in your gross receipts, but may owe tax on a lesser amount depending on your specific facts as described in Article 12-A-1 of the Business and Tax Regulations Code.
As noted in section 40116(b) of title 49 of the United States Code (“Section 40016(b)”), the Gross Receipts Tax in Article 12-A-1 of the San Francisco Business and Tax Regulations Code shall not apply to “the gross receipts from that air commerce or transportation” as that phrase is used in Section 40016(b). However, the gross receipts of an airline or other person engaged in the business of air commerce or transportation that are derived from anything other than the specific activities subject to the exemption in Section 40016(b) remain taxable unless otherwise exempt.
Tax Collector Regulations - Gross Receipts
Updated 4/29/19: Regulation No. 2019-1 - Gross Receipts Tax - Treatment Of Reimbursed Taxes
Notice of Tax Collector Hearing on "Gross Receipts Tax - Treatment Of Reimbursed Taxes" Regulation 2019-1. April 5, 2019 at 10:00am
Regulation No. 2016-1 Gross Receipts Tax - Exclusions of Certain Sales of Real Property (pdf)
Regulation No. 2016-2 Gross Receipts Tax - Payment to Construction Subcontractors (pdf)
Regulation No. 2016-3 Payroll Expense Tax and Gross Receipts Tax - Deadlines for Tax Incentives (pdf)
Regulation No. 2014-1 Gross Receipts Tax - Interpretations of Prior Law (pdf)
Regulation No. 2014-2 Business Tax - Single Member Entities Disregarded for Federal Income Tax Purposes (pdf)
Regulation No. 2014-3 Gross Receipts Tax - Agency Receipts (pdf)
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