The San Francisco Enterprise Zone Tax Credit is a credit against the San Francisco Payroll Expense Tax for new jobs created on or after January 1, 1992, pursuant to the San Francisco Payroll Expense Tax Ordinance, Section 906A, of the Business and Tax Regulations Code. It encourages business investment and provides an incentive for the creation of new jobs for targeted groups in economically distressed locations, known as the Enterprise Zone areas.

Who is eligible for the Enterprise Zone Tax Credit?
Any business or employer, as defined under Section 6.2-5 of the San Francisco Common Administrative Provisions, Business and Tax Regulations Code, shall be allowed a credit against the Payroll Expense Tax for creating new jobs and hiring qualified employees working in designated Enterprise Zone areas.

How much is the amount of the Enterprise Zone Tax Credit?
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%

In no event shall the tax credit reduce a business’ tax liability to less than zero. For an example of how the Enterprise Zone Tax Credit is calculated, read the instructions for Column F on page 3 of the attached “Instructions For Completing the 2004 Enterprise Zone Tax Credit Worksheet.”

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