Payroll Expense Tax 2018
The 2012 Gross Receipts Tax Ordinance set the new tax to phase in gradually over time. In 2014, gross receipts rates were 10% of the voter approved maximum, rising to 25% in 2015, 50% in 2016, 75% in 2017, and finally 100% in 2018. The tax change was designed to be revenue-neutral: revenue raised by the new gross receipts tax would be used to retire the payroll expense tax. The Controller’s Office is directed to compute the payroll expense tax rate during the phase-in period, using formulas in the ordinance.
For 2018, the payroll expense tax rate is 0.380%.
The basic reason for the remaining payroll expense tax rate in 2018, after the gross receipts tax has fully phased in is that gross receipts tax revenue has been less than expected.
A Payroll Expense tax rate will apply to future tax years as well.
The Controller's Office has also calculated the annual Consumer Price Index adjustments to the Small Business Exemption limits for the Gross Receipts Tax and the Payroll Expense Tax.
The Small Business Exemption limits for 2018 are: $1,120,000 for the Gross Receipts Tax and $300,000 for the Payroll Expense Tax.