Gross Receipts Tax (GR)

For 2025, persons other than lessors of residential real estate are required to file a return if in the tax year they were engaged in business in San Francisco, were not otherwise exempt, and had more than $5,000,000 in combined taxable San Francisco gross receipts.

Exemption and exclusion provisions are outlined below and 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.

Gross receipts with respect to any lease or rental shall include payment for any services that are part of the lease or rental, whether received in money or otherwise, that are paid to, on behalf of, or for the benefit of, the lessor, and all receipts, cash, credits, property of any kind or character and the fair market value of services so paid or rendered by the lessee.

For further guidance, see Business and Tax Regulations Code Section 952.3.

In general, Gross Receipts Tax rates vary based on the amount of a business's San Francisco gross receipts and business activity category. Most businesses determine their Gross Receipts Tax obligation in the following manner:

1. Determine the business’s Business Activity Category or Categories using the descriptions below. If a business derives gross receipts from more than one Business Activity Category, there are specific rules that can be found in the San Francisco Business and Tax Regulations Code under Sec 953.27.
2. Determine San Francisco gross receipts:
   • If a business derives all gross receipts from business activities in San Francisco, all non-exempt gross receipts are San Francisco gross receipts when calculating the tax.
   • If a business derives gross receipts from business activities within and outside of San Francisco, it will determine San Francisco gross receipts generally by using Allocation and Apportionment. See calculation methods below. 
3. Determine San Francisco Gross Receipts Tax obligation by applying the corresponding Gross Receipts Tax rates for the Business Activity Category or Categories to the San Francisco gross receipts. 

Businesses Deriving Gross Receipts From Business Activities Within and Outside San Francisco 

Businesses 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 the Business and Tax Regulations Code. This table indicates the applicable apportionment and/or allocation methodology for each Business Activity Category.

Allocation:  

Gross receipts are allocated to San Francisco for Business Activity Categories 1, 4, 5, and 6 depending on what generated the gross receipts.  For example, gross receipts from the sale of tangible personal property are allocated to the City if the property is shipped or delivered to a purchaser in San Francisco; gross receipts from services are in the City to the extent the purchaser receives the benefit of the services in San Francisco; gross receipts from intangible property (other than sales of financial instruments, to which a different rule applies) are in the City to the extent the intangible property is used in the City; and gross receipts from the sale, lease, rental, or licensing of real property are in the City if the real property is located in San Francisco.

For further guidance, see Business and Tax Regulations Code Section 956.1 and review regulations on gross receipts sourcing.

Apportionment:

Gross receipts generally are apportioned to San Francisco for Business Activity Categories 1, 4, 5, and 6 by multiplying the business's total non-exempt combined gross receipts by the portion of the business's total payroll in San Francisco divided by the business’s total combined payroll.

For further guidance, see Business and Tax Regulatins Code Section 956.2.

Business Activity Categories generally are defined as business activities in specified 2022 NAICS codes. For the full descriptions of the applicable the 2022 NAICS codes, go to www.census.gov/naics. The descriptions below apply to tax year 2025 only.  

Category 1:

Business activities described in NAICS Codes: 42 (Wholesale Trade), 44 and 45 (Retail Trade), 532 (Rental and Leasing Services), 71 (Arts, Entertainment, and Recreation), 722 (Food Services and Drinking Places), 811 (Repair and Maintenance), 812 (Personal and Laundry Services) but not 812930 (Parking Lots and Garages), and 813 (Religious, Grantmaking, Civic, Professional, and Similar Organizations)

Category 2:

Business activities described in NAICS Code: 721 (Accommodation)

Category 3:

Business activities described in NAICS Codes: 531 (Real Estate), 5612 (Facilities Support Services), 5617 (Services to Buildings and Dwellings), 812930 (Parking Lots and Garages)

Category 4:

Business activities described in NAICS Codes: 11 (Agriculture, Forestry, Fishing and Hunting), 21 (Mining, Quarrying, and Oil and Gas Extraction), 22 (Utilities), 31 through 33 (Manufacturing), 48 and 49 (Transportation and Warehousing), 524 (Insurance Carriers and Related Activities), 541714 (Research and Development in Biotechnology (except nanobiotechnology)), 5611 (Office Administrative Services), 5613 (Employment Services), 5614 (Business Support Services), 5615 (Travel Arrangement and Reservation Services), 5616 (Investigation and Security Services), 5619 (Other Support Services), 92 (Public Administration)

Category 5:

Business activities described in NAICS Codes: 51 (Information), 5222 (Nondepository Credit Intermediation), 5223 (Activities related to Credit Intermediation), 533 (Lessors of Nonfinancial Intangible Assets (except Copyrighted Works)), 54 (Professional, Scientific, and Technical Services) but not 541714 (Research and Development in Biotechnology (except nanotechnology)), 55 (Management of Companies and Enterprises), 562 (Waste Management and Remediation Services), 61 (Educational Services), 62 (Healthcare and Social Assistance), and all other business activities not otherwise exempt and not elsewhere subjected to a gross receipts tax rate or the administrative office tax.

Category 6:

Business activities described in NAICS Codes: 521 (Monetary Authorities-Central Bank), 5221 (Depository Credit Intermediation), 523 (Securities, Commodity Contracts, and Other Financial Investments and Related Activities), 525 (Funds, Trusts, and Other Financial Vehicles)

Category 7:

Business activities described in NAICS Code: 23 (Construction)

Gross Receipts Tax rates vary depending on the amount of San Francisco gross receipts and the Business Activity Category. 

2025 & 2026 Rates

2027 Rates

2028 Rates

*The Homelessness Gross Receipts Tax is an additional tax that applies to business activities with San Francisco gross receipts over $25 million. Learn more.   

Estimated business tax payments are due April 30th, July 31st and October 31st. Residential Landlords with $5,000,000 or less in gross receipts in the current or prior tax year are generally exempt from estimated business tax payments. Learn more about estimated quarterly payments. 

Certain supermarket and grocery businesses can claim a 0.5% annual tax credit against their Gross Receipts Tax liability, up to a maximum annual credit of $4 million. The credit is not refundable and cannot be carried forward to a subsequent year.

Who Is Eligible

Businesses with business activities described in NAICS code 445110  (Supermarkets and Other Grocery Retailers (except Convenience Retailers))

How to Claim the Credit

Eligible taxpayers can claim the credit when filing their 2025 Annual Business Tax Return online. Detailed instructions will be provided in the Gross Receipts Tax section of the return.

More Information

See Section 960.3 of the Business and Tax Regulations Codefor complete details.

Certain businesses can claim an annual tax credit against their Gross Receipts Tax liability for opening a physical location in designated areas of San Francisco. The maximum annual credit is $1,000,000 per taxpayer and the credit is available for up to three tax years immediately following the tax year the location was opened. The credit is not refundable and cannot be carried forward to a subsequent year. Eligible taxpayers must file a paper return and cannot complete an online filing.  

Who is Eligible

• Businesses with a new physical location in the following zip codes: 94102, 94103, 94104, 94105, 94107, 94108, 94109, 94111, 94133, or 94158. The location may not be a residential address.  
• Businesses are NOT eligible for this tax credit if the business (or any related entities or predecessors in interest) had a physical location or owned or rented property in San Francisco at any time in the three years prior to opening a physical location in a designated zip codes.  

Credit Amounts

• For all businesses other than administrative offices, the tax credit is 0.45% of the businesses' taxable gross receipts from business activities described in the following NAICS codes: 51 (Information); 521 (Monetary Authorities-Central Bank); 5221 (Depository Credit Intermediation); 5222 (Nondepository Credit Intermediation); 5223 (Activities related to Credit Intermediation); 523 (Securities, Commodity Contracts, and Other Financial Investments and Related Activities); 524 (Insurance Carriers and Related Activities); 525 (Funds, Trusts, and Other Financial Vehicles); 533 (Lessors of Nonfinancial Intangible Assets (except Copyrighted Works)); 54 (Professional, Scientific, and Technical Services) but not 541714 (Research and Development in Biotechnology (except nanobiotechnology)); 55 (Management of Companies and Enterprises); 5611 (Office Administrative Services); 5612 (Facilities Support Services); 5613 (Employment Services); 5614 (Business Support Services); 5615 (Travel Arrangement and Reservation Services); 5616 (Investigation and Security Services); 5617 (Services to Buildings and Dwellings); 5619 (Other Support Services); 562 (Waste Management and Remediation Services); 61 (Educational Services); 62 (Healthcare and Social Assistance); All other business activities not otherwise exempt and not elsewhere subjected to a gross receipts tax rate.
• For administrative office businesses, the tax credit is 0.7% of the businesses' taxable payroll expense.

How to Claim the Credit

Eligible taxpayers must file a paper return and will need to provide the location address, including zip code, and start date of the location.

By claiming the credit, a business waives any right to confidentiality regarding the fact that business claimed this tax credit for tax year. 

More Information

See Section 960.1 of the Business and Tax Regulations Code for complete details.

Businesses that pay the Stadium Operator Admission Tax (or a substantially similar tax to another local government) can claim a 50% credit against their Gross Receipts Tax liability, including the Administrative Office Tax. The credit is not refundable and cannot be carried forward to a subsequent year.

Who is eligible?

Businesses that pay:

• The Stadium Operator Admission Tax to the City and County of San Francisco, and/or

• A substantially similar tax to another local government during the same tax year.

How do Claim the Credit

Eligible taxpayer must file a paper return and cannot complete an online filing.

More Information

See Section 960.2 of the Business and Tax Regulations Code for complete details.

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.

Exemptions

• Certain nonprofit organizations so long as those exemptions continue to exist under state or federal law.
• Businesses exempt from local taxation, such as banks and insurance companies.

Exclusions

Rent-Controlled Buildings

A taxpayer may exclude 50 percent of the total amount received from the rental of residential real property located in San Francisco that is occupied by tenants, and subject to rent-increase limitations under the City’s Residential Rent Stabilization and Arbitration Ordinance (Administrative Code Chapter 37).

Certain Sales of Real Property

Gross receipts do not include receipts from any sale of real property on which the San Francisco Real Property Transfer Tax (Article 12-C) has been paid.

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.

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:

1.  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
2. 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 the tax year, include that entity in your combined group’s Return for the portion of the tax year that it was a member. For the portion of the tax year 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 the year 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 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 for appportionment purposes, 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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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.

 Regulation 2025-1 - Gross Receipts Tax - Sourcing

Regulation No. 2019-1 - Gross Receipts Tax - Treatment Of Reimbursed Taxes

Regulation No. 2016-1 Gross Receipts Tax - Exclusions of Certain Sales of Real Property (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)

Before 2014

In the years immediately prior to tax year 2014, 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 levy its entire 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.

2014

Proposition E was approved by San Francisco voters on November 6, 2012, and became operative in tax year 2014. 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, generally applying starting in 2021. Proposition F completed the City’s transition from a Payroll Expense Tax to a Gross Receipts Tax. 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.

2024

Proposition M is a comprehensive restructuring of San Francisco’s business tax system that was approved by San Francisco voters on November 5, 2024. Proposition M provided relief to small businesses, reduced the number of business activity categories, consolidated Business Registration Fee and Gross Receipts Tax deadlines. See a full summary of changes on the Proposition M webpage.