What does San Francisco Proposition C do?

Proposition C would make two changes to City business taxes starting in 2027. It raises the small business exemption from $5 million to $7.5 million in SF gross receipts, exempting more small businesses from the Gross Receipts Tax and Top Executive Pay Tax. It also moves up a scheduled 2028 tax rate increase to 2027, with no further increases after that.

How much revenue would San Francisco lose under Proposition C?

According to the Controller's Office, Prop C would reduce annual City revenue by an estimated $30 million to $40 million. The decrease comes primarily from raising the small business exemption, which would remove more businesses from the tax rolls. Actual revenue impacts could vary based on economic conditions.

How does Proposition C affect small businesses in San Francisco?

Prop C raises the small business exemption from $5 million to $7.5 million in gross receipts. Most businesses below this threshold would owe no Gross Receipts Tax or Top Executive Pay Tax. This means more small and mid-sized businesses would be fully exempt from these taxes, reducing their operating costs in San Francisco.

What is the difference between Proposition C and Proposition D?

Props C and D both change the same business tax code but in opposite directions. Prop C makes smaller rate adjustments and raises the small business exemption, reducing city revenue by $30-40M annually. Prop D significantly increases tax rates by roughly 800% and uses global employees in the pay ratio calculation, raising revenue by $250-300M annually.

Who put Proposition C on the ballot?

Prop C was placed on the ballot by voter signature petition, led by the San Francisco Chamber of Commerce. It represents the business community's approach to tax reform — modest rate adjustments paired with a higher small business exemption — as an alternative to Prop D's more aggressive tax increases.

Would Proposition C raise or lower taxes for San Francisco businesses?

Prop C would lower the overall tax burden for most businesses. By raising the small business exemption to $7.5 million, it removes many businesses from the tax entirely. It does move up a scheduled 2028 rate increase to 2027, but caps rates there with no further increases, providing long-term predictability for businesses.

How would Proposition C affect San Francisco's city budget?

The Controller estimates a $30-40 million annual revenue reduction. The City would need to absorb this through spending adjustments or other revenue sources. Supporters argue the tax relief helps retain businesses and jobs in San Francisco, which generates broader economic benefits that partially offset the direct revenue loss.

San Francisco Proposition C — Decreases to Business Taxes

Yes on Proposition C

Decreases to Business Taxes

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What is it?

Beginning in 2027, Proposition C would make two changes to City business taxes.

Raise the small business tax exemption from $5M to $7.5M in SF gross receipts, so they would not be subject to this tax.
Raise rates slightly for other businesses.

All thresholds would automatically adjust with the Consumer Price Index.

According to the Controller's Office, the changes would reduce annual City revenue by an estimated $30M to $40M.

Competing measure

Prop D is also on this ballot and changes the same tax code. Prop C makes smaller rate adjustments and raises the small business exemption, while Prop D significantly increases rates and changes how the tax rate is calculated by looking at compensation across all employees, globally, not just those located in SF.

If both pass, the one with more votes wins. Prop C's conflicting measures clause allows non-conflicting parts of the losing measure to still take effect. Prop D's clause would void the loser entirely.

Read the full annotated legal text →

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Why vote Yes?

Prop C is a balanced adjustment to SF business taxes that helps small businesses while raising rates on larger ones to partially offset the cost.

The $5M small business tax exemption approved in 2024 was a good start, but costs have kept rising. Bay Area business costs have spiked by over 15% since 2021, making the $5M limit outdated. A neighborhood restaurant making $6M in sales isn't a "corporate giant"; it's a small business with thin margins. After paying for San Francisco wages, rent and supplies, their actual take-home pay is often very small. Raising the exemption to $7.5M ensures that tax relief stays in line with the actual cost of doing business in our city today.

Is Prop C a perfect solution? No. The rate increase is small and won't fully close the revenue gap, but it's the reasonable, moderate solution on this ballot. San Francisco cannot tax its way to prosperity — and Prop C reflects the reality that keeping small businesses alive and growing is what will ultimately generate the revenue the city needs.

Vote Yes on Prop C to keep San Francisco affordable for small businesses.

Yes on Proposition C

What is it?

Competing measure

Click to show fiscal impacts and more details

Why vote Yes?

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