San Francisco Enterprise Zone Payroll Tax Credit
January 4, 2011
The San Francisco Enterprise Zone Payroll Tax Credit is a credit against the San Francisco Payroll Expense Tax for new jobs created on or after January 1, 1992. This benefit will be most applicable for your hires in San Francisco that occurred on or after 8/1/2008 since that is when the program requirements were expanded to include all new hires instead of being limited to positions that result in an overall net increase in employment positions. However, the law does impose an additional requirement that only San Francisco residents are eligible. It’s important to note that this local program follows similar qualification guidelines as the state program with one material difference – the local program does not include the Targeted Employment Area Resident category (i.e. qualification based on address). Based on your current approach to screen only for the address criteria, you are not able to capture this benefit.
The tax credit, for each qualified employee, shall be a varying percentage of the additional tax that would be incurred as a result of additional wages paid for work performed within the Enterprise Zone areas. The dollar amount of such tax credit shall depend both upon the duration of employment (see below) and eligible wages.
| Duration of Employment | Tax Credit |
| First 24 months | 100% |
| Second 24 months | 50% |
| Third 24 months | 25% |
| Fourth 24 months | 15% |
| Fifth 24 months | 10% |
We recommend setting up a single employee screening process to capture the San Francisco Enterprise Zone Payroll Tax Credit and other employment tax incentives such as the California Enterprise Zone Hiring Credit and/or the Federal Work Opportunity Tax Credit.
