What This Measure Is

This is a San Francisco–only ballot initiative.
It does not apply statewide.

It changes how business taxes are applied in San Francisco, with two main goals:

• Exempt more small and mid-sized businesses

• Increase taxes on companies with very high executive pay gaps

How Business Taxes Work Now

San Francisco currently uses three main business taxes:

1. Gross Receipts Tax

• Based on San Francisco revenue

• Rates range from 0.1% to 3.36%

• Scheduled increases in 2027 and 2028

• Most businesses with $5 million or less in SF revenue are exempt

2. Administrative Office Tax

• Applies to companies where over half of payroll is administrative/management

• Taxed at 1.47% of SF payroll

• Also scheduled to increase in 2027–2028

3. Top Executive Pay Tax (Existing)

• Applies when a company’s highest-paid executive earns more than 100× the median SF employee

• Adds an extra tax on top of the two taxes above

• Many smaller businesses are already exempt

What This Measure Changes

1. Expands the Small Business Exemption

• Raises the exemption threshold to $7.5 million in SF gross receipts

• Businesses under that amount would be exempt from:

  • Gross Receipts Tax

  • Top Executive Pay Tax

Why this matters:
More small and mid-sized businesses would pay no city business tax at all.

2. Raises and Accelerates the Top Executive Pay Tax

Starting in 2027, the measure:

• Moves a scheduled 2028 tax increase into 2027

• Applies that higher rate going forward, with no additional scheduled increases

New additional tax ranges

• Businesses paying Gross Receipts Tax:
  Extra 0.021% to 0.129% of SF gross receipts

• Businesses paying Administrative Office Tax:
  Extra 0.086% to 0.514% of SF payroll

These apply only to companies with very large executive-to-worker pay gaps.

3. Makes the Changes Permanent

• All changes apply indefinitely until repealed

• Rates may adjust only for inflation (Consumer Price Index)

• Revenues continue to go to general city purposes

How the Money Is Used

Funds go into San Francisco’s General Fund, which supports:

• Public health and hospitals

• Emergency services

• City operations

• Infrastructure and basic services

No money is earmarked for a specific program.

Who Is Behind the Measure

• Sponsor: Protect San Francisco’s Small Businesses and Economic Recovery

• Major funder listed: Chris Larsen

• Website on petition: https://sfeconomicrecovery.com

Who This Affects Most

Mostly affected

• Large corporations

• Companies with extreme executive pay gaps

• Businesses with over $7.5M in SF revenue

Mostly not affected

• Small businesses

• Local shops and service providers

• Businesses under the exemption threshold

Real-life example:
A neighborhood restaurant or local service company earning under $7.5M in SF revenue would likely owe no business tax under this system.

Common Questions

Is this a new tax?

No.
It modifies existing business taxes.

Is this statewide?

No.
It applies only in San Francisco.

Can the Board of Supervisors change it later?

Only if voters approve another ballot measure.

Where This Appears on the Ballot

• San Francisco local ballot

• Voted on by San Francisco residents only

• Title focuses on “Changes to Business Taxes”

Bottom Line

• Expands tax exemptions for small businesses

• Raises taxes on companies with extreme executive pay gaps

• Accelerates scheduled tax increases

• Locks changes in unless voters repeal them