Prop F (2020): Business Tax Overhaul

Proposition F was approved by San Francisco voters on November 3, 2020 and became effective January 1, 2021. Proposition F eliminates the City’s Payroll Expense Tax and gradually raises the Gross Receipts Tax rates across most industries while temporarily lowering those rates for some small businesses in certain industries. Proposition F will complete the City’s transition away from payroll taxes.

Overview:

  • 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.

         Tax Estimation Tool

Small Business Exemption:

Proposition F expands the small businesses exemption ceiling

Proposition F expands the small business exemption ceiling from $1.2 million to $2 million. For 2021, most businesses other than lessors of residential real estate that have San Francisco gross receipts of $2 million or less:

  • Must renew their annual Business Registration 
  • Do NOT need to file their Annual Business Tax Return or pay Gross Receipts Tax

View illustration of how Proposition F impacts the small business exemption.

Temporary Gross Receipts Tax Rate Reductions for Certain Industries:

Certain industries hit hard by the coronavirus pandemic and related shutdowns may temporarily be subject to lower gross receipts tax rates than in 2020. Those industries include:

  • Retail Trade;
  • Certain Services;
  • Manufacturing;
  • Food Services;
  • Accommodations;
  • Arts, Entertainment and Recreation

Calculating Quarterly Payments:

Proposition F changes how quarterly payments are calculated

Quarterly estimated payments reflected in our system will be based on your 2020 Annual Business Tax Return filing and will be displayed in the payment portal. You may pay the lesser of:

  • The amount displayed in the payment portal; or
  • An amount equal to 25% of your Business Taxes due for 2021, which may be $0.

More detail on how to calculate your estimated payments. 


Estimate Impact of Prop F on Taxes

This estimation tool is for small business estimation purposes only and is not a replacement for filing a return. Use the tool by selecting a business activity, gross receipts amount, and payroll expense amount and the tool will show sample estimated tax obligations for before and after the implementation of Proposition F. 

 

Small Business Exemption & Payroll Impact*:

Prop F flowchart: before and after

Tax and Fee Rates

Gross Receipts Tax rates vary depending on a business' gross receipts and business activity.

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; Bio-Technology; and Clean Technology0.175%0.287%0.518%0.665%

Accommodations; and Arts Entertainment and Recreation

0.210%

0.228%

0.288%

0.560%

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

0.735%

0.770%

0.840%

0.910%

Construction

0.420%

0.490%

0.560%

0.630%

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

0.560%

0.644%

0.714%

0.784%

Utilities0.420%0.455%0.455%0.560%
Wholesale Trade0.105%0.140%0.189%0.224%
     
 0-$1m$1-$5m$5-$25m$25m +
Real Estate and Rental and Leasing Services0.399%0.399%0.420%0.420%

 

Business Registration Fees for new businesses are based on San Francisco gross receipts or payroll expense for the current calendar year, and the business activity types selected. Use Schedule B if your business consists solely of the business activities of Certain Services (e.g. Repair/Maintenance, Personal/Laundry, Civic Orgs), Retail Trade, and/or Wholesale Trade (described on page 1 of the Application).  If your business does anything else, use Schedule A.

Business Registration Fees for the registration year beginning July 1, 2021 and ending June 30, 2022.

2020 San Francisco Gross ReceiptsSchedule ASchedule BState Fee
$0 to $100,000$52$43$4
$100,000.01 to $250,000$86$72$4
$250,000.01 to $500,000$144$115$4
$500,000.01 to $750,000$288$230$4
$750,000.01 to $1,000,000$403$345$4
$1,000,000.01 to $1,500,000$575$475$4
$1,500,000.01 to $2,000,000$805$665$4
$2,000,000.01 to $2,500,000$345$230$4
$2,500,000.01 to $7,500,000$575$460$4
$7,500,000.01 to $15,000,000$1,725$1,294$4
$15,000,000.01 to $25,000,000$5,751$4,313$4
$25,000,000.01 to $50,000,000$14,379$8,627$4
$50,000,000.01 to $100,000,000$25,882$17,255$4
$100,000,000.01 to $200,000,000$34,510$23,006$4
$200,000,000.01 and over$40,261$34,510$4

 

For businesses that qualify as Administrative Offices, the following Business Registration Fees apply for the registration year ending June 30.

2020 San Francisco Payroll Expense

2021 AOT Rate

State Fee

$0 to $2,500,000

$15,000

$4

$2,500,000.01 to $25,000,000

$25,000

$4

$25,000,000.01 or more

$35,000

$4

Most businesses with San Francisco Gross Receipts up to $1m:
Registration Fee reduction (approximately 50%) depending on the business' Business Activities

Most Businesses with San Francisco Gross Receipts between $1-$1.5m:
Registration Fee increase of $230 or $245 depending on the business' Business Activities

Most Businesses with San Francisco Gross Receipts between $1.5-$2m:
Registration Fee increase of $435 or $460 depending on the business' Business Activities

Gross receipts rates 2020-2024

Additional Information

Full text of Proposition F is available here

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