Overpaid Executive Tax (OE)

The Overpaid Executive Tax (also referred to as the Overpaid Executive Gross Receipts Tax) was approved by San Francisco voters on November 3, 2020 and becomes effective on January 1, 2022.  It imposes an additional gross receipts tax of 0.1% to 0.6% on taxable gross receipts from businesses in which the highest-paid managerial employee earns more than 100 times the median compensation of employees based in San Francisco.  Businesses that pay the Administrative Office Tax will pay an additional 0.4% to 2.4% on their payroll expense in San Francisco in lieu of the additional gross receipts tax.

The Overpaid Executive Tax is filed as part of the Annual Business Tax Return.

Except for Administrative Office Tax filers, a business exempt from the Gross Receipts Tax as a small business enterprise is also exempt from the Overpaid Executive Tax.

Additionally, the Overpaid Executive Tax does not apply to:

  • Certain nonprofit organizations and businesses exempt from local taxation, such as banks and insurance companies; and
  • Receipts that are excluded from gross receipts for purposes of the gross receipts tax.

Overpaid Executive Tax rates vary and are based on the compensation ratio of the highest-paid managerial employee and median employee based in the City.

Additional Gross Receipts Tax Rates

Executive Pay Ratio

Additional Gross Receipts Tax Rate

Greater than 100:1 but less than or equal to 200:1

0.1%

Greater than 200:1 but less than or equal to 300:1

0.2%

Greater than 300:1 but less than or equal to 400:1

0.3%

Greater than 400:1 but less than or equal to 500:1

0.4%

Greater than 500:1 but less than or equal to 600:1

0.5%

Greater than 600:1

0.6%

 

Additional Administrative Office Tax Rates

Executive Pay Ratio

Additional Payroll Tax Rate

Greater than 100:1 but less than or equal to 200:1

0.4%

Greater than 200:1 but less than or equal to 300:1

0.8%

Greater than 300:1 but less than or equal to 400:1

1.2%

Greater than 400:1 but less than or equal to 500:1

1.6%

Greater than 500:1 but less than or equal to 600:1

2.0%

Greater than 600:1

2.4%

Compensation includes wages, salaries, commissions, bonuses, property issued or transferred in exchange for the performance of services (including but not limited to stock options) as well as compensation for services to owners of pass-through entities, and any other form of remuneration paid to employees for services.

No estimated payments for the Overpaid Executive Tax are due in 2022. Beginning in 2023, estimated business tax payments are due April 30th, July 31st and October 31st. Residential Landlords with $2,000,000 or less in San Francisco gross receipts are exempt from estimated quarterly business tax payments and will not receive an estimated business tax payment notice. Learn more about quarterly estimated payments.

Article 33: Overpaid Executive Gross Receipts Tax Ordinance

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