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New San Francisco Business Tax Laws

San Francisco voters have approved Propositions C & D in the November 2018 election.

What this means to businesses:

Prop C Impact: Additional business taxes to create a dedicated fund to support services for homeless people and prevent homelessness, including one tax of 0.175% to 0.69% on gross receipts over $50 million that a business receives in San Francisco, and another tax of 1.5% on certain administrative offices’ payroll expense in San Francisco, raising an estimated $250–300 million in combined tax revenues annually.

Prop D Impact: Two changes to the gross receipts tax. The media focused on Prop D as a cannabis tax but it applies to all industries as there are 2 components to Prop D.

New Law 1: SF will impose new cannabis business taxes beginning in 2021, at rates ranging from 1% to 5% on gross receipts of cannabis businesses in San Francisco, where the Board of Supervisors could decrease those rates, or increase them up to 7%; AND

New Law 2: SF will apply many of its business taxes to businesses without a physical presence in SF, with over $500,000 in gross receipts in San Francisco. This levels the playing field for out of city businesses who compete with SF businesses subject to SF taxes.

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Richard Pon CPA, CFP