San Francisco payroll and gross receipts taxes
San Francisco does not take a local income tax out of employees' paychecks; its gross receipts tax and payroll expense tax are business taxes the employer pays, administered by the Office of the Treasurer and Tax Collector, and California has no local wage income tax at all (checked October 16, 2026). We could not verify the 2026 San Francisco rates that day because the city's sites blocked or failed our reader, so this page gives none.
What you can budget with confidence is the California payroll cost for a San Francisco employee, shown below.
San Francisco's gross receipts tax and payroll expense tax are city business taxes paid by employers on their own returns, measured partly by receipts and payroll, and are not withheld from employee wages.
On this page
A business tax, not a paycheck deduction
This is the main point to get right. San Francisco's business taxes go on the company's own return, generally an annual return with estimated payments, a schedule we could not confirm this month. Nothing is withheld from employees for these taxes, and you should not take a deduction from pay to cover them.
The rates, the small business exemption and the changes San Francisco voters approved in Proposition M in 2024 all affect what a company owes. None of those could be read from an official page on October 16, 2026, which is why this page is marked not for search indexing until we can.
The rates and rules
| Where | Tax | 2026 rate | Who pays | Wage base or cap | Filing | Official source |
|---|---|---|---|---|---|---|
| San Francisco, CA | Gross receipts tax / payroll expense tax (business taxes) | employer (business tax, not withheld from wages) | Annual return with estimated payments (unconfirmed) | source |
Checked October 2026 against the official city, county or state pages linked in each row.
The verified part: a $60,000 San Francisco employee
| Item | Who pays | Math | Amount |
|---|---|---|---|
| Social Security and Medicare | Employer | $60,000 x 7.65% | $4,590.00 |
| FUTA (net) | Employer | $7,000 x 0.6% | $42.00 |
| California UI, new employer | Employer | $7,000 x 3.4% | $238.00 |
| California ETT | Employer | $7,000 x 0.1% | $7.00 |
| Employer total before SF business tax | $4,877.00 | ||
| California SDI | Employee | $60,000 x 1.3% | $780.00 |
Sources: IRS Form 940 instructions and Social Security Administration (federal rates); California EDD rates and withholding page; checked Oct 2026. Our arithmetic.
One more risk: California faces a possible 1.5% FUTA credit reduction for 2026, which would add $7,000 x 1.5% = $105.00 per employee, or 5.3% ($371.00) if the DOL's benefit cost rate add-on applies. The Department of Labor's list is final after November 10, 2026. The California payroll tax page tracks it, and the employee cost calculator totals your own team.
Questions to ask the Treasurer before you budget
- Which tax applies to your business for 2026, the gross receipts tax, the payroll expense tax, or both, and at what rate for your business activity?
- Does your company fall under the small business exemption, and what is the 2026 threshold?
- How did Proposition M (2024) change your rate category or filing?
- When are estimated payments and the annual return due?
- Which payroll figure does the city want: San Francisco payroll only, or all payroll apportioned to the city?
Write down who you spoke to and the date. Then plan the cash as a quarterly or annual business expense, not a per-paycheck cost.
Mistakes to avoid
- Deducting it from pay. These are employer taxes. Taking them from wages would shortchange employees.
- Confusing it with SDI. California's 1.3% SDI is the employee deduction you do withhold; it has no wage cap since January 1, 2024.
- Expecting your payroll provider to file it. This is a business tax return. Ask your provider whether it produces the San Francisco payroll figures you need; we found no provider documentation that it files the return.
- Budgeting from the 2026 wage floor. California's minimum wage is $16.90 in 2026 and rises to $17.40 on January 1, 2027, and the exempt salary floor becomes $72,384. Any city business tax measured by payroll grows with those raises.
Where to go next
For the parts of California payroll that do run through your paychecks, see our payroll software rankings, how payroll taxes work and SUTA rates by state. Other local employer taxes measured by payroll include Oregon's TriMet transit tax and St. Louis's payroll expense tax; the payroll tax hub lists every state and city page.
Frequently asked questions
Does San Francisco have a payroll tax withheld from employees?
What is the San Francisco gross receipts tax rate for 2026?
What does a $60,000 employee in San Francisco cost in payroll taxes?
What California tax is withheld from a San Francisco employee's pay?
Is California subject to a FUTA credit reduction for 2026?
Sources (5)
- San Francisco Office of the Treasurer and Tax Collector: Gross receipts tax and payroll expense tax (returned errors) (attempted Oct 16, 2026)
- California EDD: Rates and withholding (checked Oct 16, 2026)
- California Department of Industrial Relations: 2027 minimum wage release (checked Oct 16, 2026)
- IRS: Instructions for Form 940 (checked Oct 16, 2026)
- Social Security Administration: Contribution and benefit base (checked Oct 16, 2026)
This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.