San Francisco

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Taxes

Basic information on local, state, and federal taxes applicable to residents and workers in San Francisco.

Sections

1. Overview of Tax Categories in San Francisco

San Francisco residents and visitors are subject to several types of taxes, including:

  • Income Tax (Federal and State)
  • Sales Tax (State and Local)
  • Property Tax (Local)
  • Business Taxes (Local, for business owners)
  • Other Taxes and Fees (e.g., hotel taxes, vehicle registration fees)

2. Income Tax

Income tax in San Francisco is levied at both the federal and state levels. There is no additional city-level income tax.

Federal Income Tax

  • Administered by: Internal Revenue Service (IRS)
  • Rates: Progressive, ranging from 10% to 37% depending on your income bracket.
  • Filing Requirements: All residents, including immigrants and non-citizens earning income in the U.S., must file federal income taxes if their income exceeds certain thresholds.
  • Forms: Common forms include Form 1040 (individual income tax return).

California State Income Tax

  • Administered by: California Franchise Tax Board (FTB)
  • Rates: Progressive, ranging from 1% to 12.3%, with an additional 1% surcharge for incomes over $1 million (referred to as the "Mental Health Services Tax").
  • Filing Requirements: California residents and part-year residents must file state income taxes if they meet income thresholds.
  • Forms: Form 540 (California Resident Income Tax Return) or Form 540NR (Nonresident/Part-Year Resident Return).

Key Deadlines

  • Federal and State Tax Filing Deadline: April 15 (or the next business day if it falls on a weekend/holiday).
  • Extensions: You can request a six-month extension to file, but taxes owed must still be paid by the April deadline to avoid penalties.

Local Considerations

  • San Francisco does not impose a city income tax.
  • If you are a new resident, ensure you update your address with the IRS and FTB to avoid delays in correspondence.

3. Sales Tax

Sales tax is a combination of state, county, and city taxes applied to the purchase of goods and some services.

Current Sales Tax Rate in San Francisco

  • Total Rate: 8.625% (as of October 2023)
    • Breakdown:
      • California State Base Rate: 7.25%
      • San Francisco County/City Add-On: 1.375%

What is Taxed?

  • Taxable Items: Most tangible goods, such as clothing, electronics, and furniture.
  • Exemptions: Groceries, prescription medications, and some medical devices are exempt from sales tax.

Tips for Visitors

  • If youโ€™re visiting from abroad, note that the U.S. does not offer a VAT refund system like in some other countries.

4. Property Tax

Property tax is levied on real estate and is a significant source of revenue for local governments.

Key Details

  • Administered by: San Francisco Office of the Treasurer & Tax Collector
  • Rate: Approximately 1.2% of the assessed value of the property annually.
    • Assessed value is based on the purchase price, with annual increases capped at 2% under Californiaโ€™s Proposition 13.
  • Due Dates:
    • First Installment: November 1 (delinquent after December 10)
    • Second Installment: February 1 (delinquent after April 10)

For Renters

  • Renters do not pay property tax directly, but landlords may factor property taxes into rental prices.

For New Homeowners

  • If you purchase property in San Francisco, youโ€™ll also pay a transfer tax at the time of sale, which ranges from 0.5% to 6% of the propertyโ€™s value, depending on the sale price.

5. Business Taxes

If you plan to start a business in San Francisco, youโ€™ll need to be aware of local business taxes.

Key Taxes

  • Gross Receipts Tax: Based on the gross revenue of your business, with rates ranging from 0.075% to 0.65%, depending on the type and size of the business.
  • Payroll Expense Tax: 0.38% of total payroll expenses for businesses with over $400,000 in annual payroll.
  • Registration Fees: Businesses must register annually with the city, with fees ranging from $25 to $35,000 depending on gross receipts.

Resources for Business Owners

6. Other Taxes and Fees

  • Hotel Tax (Transient Occupancy Tax): Visitors staying in hotels, motels, or short-term rentals (e.g., Airbnb) pay a 14% tax on the cost of their stay.
  • Vehicle Registration Fees: If you own a car in San Francisco, youโ€™ll pay annual registration fees to the California Department of Motor Vehicles (DMV), which include a vehicle license fee (VLF) based on the carโ€™s value.

7. Filing Procedures

Federal Taxes

  1. Gather necessary documents (e.g., W-2s, 1099s, receipts for deductions).
  2. File online via the IRS website or use tax preparation software like TurboTax or H&R Block.
  3. Alternatively, hire a tax professional or visit a Volunteer Income Tax Assistance (VITA) site if you qualify for free help.

State Taxes

  1. File online through the California Franchise Tax Boardโ€™s website: https://www.ftb.ca.gov.
  2. Use tax software that supports state filings or consult a tax professional.

Local Taxes

  • Business owners must file and pay local taxes through the San Francisco Office of the Treasurer & Tax Collectorโ€™s website.

8. Deadlines

  • Federal and State Income Taxes: April 15
  • Property Taxes: December 10 (1st installment) and April 10 (2nd installment)
  • Business Taxes: Annual filings are typically due by March 1.

9. Resources for New Residents and Visitors

  • IRS Website: https://www.irs.gov
  • California Franchise Tax Board: https://www.ftb.ca.gov
  • San Francisco Treasurer & Tax Collector: https://sftreasurer.org
  • Free Tax Help:
    • Volunteer Income Tax Assistance (VITA): Free tax preparation for individuals earning $60,000 or less.
    • Tax Counseling for the Elderly (TCE): Free tax help for seniors.

10. Tips for New Residents

  • Keep Records: Maintain organized records of income, expenses, and tax payments.
  • Understand Residency Rules: If you recently moved to California, you may need to file as a part-year resident.
  • Seek Professional Help: Tax laws can be complex, so consider consulting a certified public accountant (CPA) or enrolled agent (EA) for guidance.

By understanding these tax categories and procedures, youโ€™ll be better prepared to navigate the tax system in San Francisco. Let me know if you need further clarification or assistance!