Business Registry and Tax

Businesses located in a fixed place of businesses are required to apply for a business registry certificate and pay a quarterly business tax. Some exemptions and tax offsets and/or credits, outlined in the below sections, may apply to your business.

The City partnered with HdL Companies, based in Fresno, CA, to administer the program by accepting online applications, filings, and payments, and performing compliance and enforcement activities.

Business Registry Renewal: Each year, certificates for the Business Registry expire on March 31. Renewal notices are sent by HdL (the City’s partner) in early March and the payment portal opens March 1. Renewals are due by March 31, with late payment penalties beginning May 1. New businesses should register online or contact HdL at PaloAlto@hdlgov.com or (650) 838-2882.

Business Tax Filing: Businesses must file and pay the Business Tax every quarter, with filings due on January 1, April 1, July 1, and October 1. Each filing covers the activity from the previous quarter. Exempt businesses are required to file annually to maintain their exemption status. Businesses should file using the online tax portal.

Business Tax Revenue and Expenses: Here one can find a breakdown of business tax revenue and expenses showing where the business tax revenue is allocated such as transportation and housing projects.

Revenue and Expenses Report

In November 2022, Palo Alto voters approved Measure K, adopting a general tax on businesses operating in the City of Palo Alto. Council approved this funding source to be split between three critical service areas: public safety, affordable housing and homeless services, and transportation and grade separation projects with additional funding for administration of the tax.

The business tax is based on a square footage of businesses, and more information can be found under General Fund Revenue Description later in this section. The tax became effective January 2023, with the rate through January 2025 being 50% of the full rate, or 3.75 cents per square foot per month. The full rate will be assessed starting January 2025 at 7.5 cents per square foot per month. The tax has an annual cap of $0.5 million per business and both the rate and the cap will be increased by 2.5% annually beginning in FY 2027.

The FY 2026 Proposed Budget assumes $6.5 million, a 23.6% or $1.2 million increase compared to FY 2025 Adjusted Budget of $5.3 million. This revenue level represents a stabilized baseline, as FY 2026 is the first full year of the full tax rate. Discovery and compliance efforts remain a focus to capture and recover business tax revenue.

Table 1: FY 2024 Actual Business Tax Revenue and Programmed Expenses

	Transportation & Rail Crossing	Housing	Public Safety	Administration	Total Funding
Revenue	$1.6M	$1.6M	$1.6M	$0.5M	$5.3M
Expenses (programmed)	-$0.8M	-$0.5M	-$1.6M	-$0.5M	-$3.4M
Net Available	$0.8M	$1.1M	$0	$0	$1.9M

Table 2: FY 2025 Budgeted Business Tax Revenue and Programmed Expenses

	Transportation & Rail Crossing	Housing	Public Safety	Administration	Total Funding
Revenue	$1.6M	$1.6M	$1.6M	$0.5M	$5.3M
Expenses (programmed)	-$1.5M	-$1.6M	-$1.6M	-$0.5M	-$5.1M
Net Available	$0.1M	$0	$0	$0	$0.1M

Table 3: FY 2026 Proposed Budgeted Business Tax Revenue and Programmed Expenses

	Transportation & Rail Crossing	Housing	Public Safety	Administration	Total Funding
Revenue	$2.0M	$2.0M	$2.0M	$0.5M	$6.5M
Expenses (programmed)	-$1.9M	-$1.9M	-$2.0M	-$0.5M	-$6.3M
Net Available	$0.1M	$0.1M	$0	$0	$0.2M

Table 4: Projected Cumulative Business Tax Reserves

	Transportation & Rail Crossing	Housing	Public Safety	Administration	Total Funding
Net Available	$1.0M	$1.2M	$0	$0	$2.2M

Transportation and Rail Crossing Expenses

• FY 2024 ($0.75 million): $0.32 million for Churchill Ave Rail Grade Separation & Safety Improvement (PL-24001) and $0.43 million for Meadow Drive & Charleston Road Rail Grade Separation and Safety Improvements (PL-24000)

• FY 2025 ($1.5 million): $0.75 million for PL-24001 and $0.75 million for PL-24000

• FY 2026 ($1.9 million): $0.9 million for Bicycle and Pedestrian Transportation Plan (PL-04010), $0.5 million for PL-24001 and $0.5 million for PL-24000

Housing Affordability & Services for Unhoused Expenses

• FY 2024($0.5 million): $0.5 million for HomeKey

• FY 2025($1.5 million): $0.8 million for HomeKey and $0.7 million for San Antonio Coordinated Area Plan (CAP)

• FY 2026 ($1.9 million): $1.0 million for HomeKey, $0.7 million for San Antonio CAP, and $0.2 million Geng Road Safe Parking

Public Safety Expenses

• Annually and Ongoing: Funding spent on public safety services appropriations as authorized within the Council adopted budget. Expenses include but are not limited to additional dispatch staffing, staffing for traffic team, fully staffing a fire engine at station 2, and support recruitment and retention efforts through competitive labor agreements.

Administration

• Annually and Ongoing: Business tax administration by the City’s consultant, HdL, and Administrative Services support staff

Business Registry

Businesses located in fixed places of business (i.e., commercial buildings, retail storefronts, etc.) within the City of Palo Alto are required to register with the City (Palo Alto Municipal Code, Chapter 4.60; January 19, 2016 staff report to Council (ID 6470); and Ordinance #5379). Businesses are required to have a valid registry certificate; annual renewals are sent to businesses the beginning of March, with payment due March 31. The requirement to obtain a business registration certificate is separate from the requirement to pay business tax.

The amount due on March 31 is $54.00, which includes a $4 State of California pass through fee for Americans with Disabilities Act (ADA) compliance. A $25 late payment fee will be applied to payments received after April 30; payments received after May 30 will accrue an additional $25 late payment fee.

Step 1.Create business registry account, complete application, and submit payment

When a business begins operating in the City for the first time, registration with the City must be completed within 30 days of starting your business.

Please note, that the online account for the business registry is separate from the online account for the business tax. Once registered, log in using the account number and PIN that was sent to you via email or mail.

Business Registry Portal

Exempt Businesses

Your business is exempt from the business registry if you are either:
A business or non-profit organization with less than 1 Full-Time-Equivalent employee, including owner/principal.
A religious organization with no ancillary business on-site. A home-based or transitory (or virtual) business, you are exempt from obtaining a Business Registry Certificate.
A general contractor or sub-contractor, who performs work from time to time in Palo Alto and does not have a fixed place of business (e.g., office) in the City.

Exempt businesses must file an application form on an annual basis; however, no fee will be applied. To claim an exemption, file an application form and select your exemption status.

Required Business Registry Information

Business Name, Description, Structure, State of Incorporation, and Inception Date
Owner/Principal Name, Address, Telephone Number, Email Address
Business Address(es) – primary location and any other locations in Palo Alto Number of employees (full-time, part-time, contract, and volunteers – including Owner/Principal) at each location during peak times on a normal business day)
Square footage your business occupies in each location
- This is the gross area in square feet your business occupies. You can find this information in your lease agreement or building floor plans. For assistance, contact your property management team
Federal EIN and/or Sellers permit number

Step 2.Annual renewal

Renewals begin March 1 annually. If your business is already registered, a renewal notice will be emailed or mailed that includes your account number and PIN. You can electronically submit the application and make payment online or mail to the City’s partner, HdL.

Business Registry Portal

Step 3.Business closure, account changes, or request account updates

Updates to your business, including single location or multiple location closure, contact information, or addresses can be done in the Business Registry Portal.

Business Tax

In November 2022, Palo Alto voters approved Measure K, adopting a general tax on businesses operating in the City of Palo Alto. The business tax, codified in Chapter 2.37 of the Palo Alto Municipal Code, is based on the square footage of businesses. The tax is structured so that each quarter tax is due the first day of the following quarter.

The requirement to pay business tax is in addition to and separate from the requirement to obtain a business registration certificate from the City.

The City’s Administrative Regulations provide an overview of the tax, how to calculate the tax, and eligibility for tax offsets.

Business Tax Administrative Regulations

Step 1.Apply to register in the City’s Business Registry Certificate Program

When a business begins operating in the City for the first time and completed the business registry process, HdL Companies will create an online account for the business tax and send log in credentials to the contact information on file.

Business Tax Portal

Step 2.Calculating and Paying the tax

Tax is due and shall be paid quarterly. The tax for each quarter is due the first day following the end of the quarter and is delinquent 30 days later. Tax filing and required payments can be done through the City’s online portal or via mail.

Business Tax Portal

Tax Rate and Timing

The Business Tax is imposed on each square foot occupied by the business, with exemptions for certain business types and tax credits for remitted hotel tax, certain sales tax paid by a business, and vacant space. Please refer to the below chart for details of rate, timing, exemptions, and credits:

Rate	Monthly rate of $0.075/square foot for all non-exempt businesses A $500,000 annual tax cap, adjusted by CPI. Flat 2.5% increase annually applied to both the month rate and tax cap, beginning fiscal year 2026-2027
Timing	Tax to be imposed January 2023. Quarterly collections beginning January 2024 50% of monthly rates for first 24 months; full tax rate January 2025 35-year sunset, ending 2058

Tax Offsets

Eligible businesses may be able to offset some of all of their business tax obligation. There are three types of tax offsets. Please schedule a virtual consultation with the City to confirm eligibility and determine appropriate documentation to submit. Staff will provide next steps for your filing.

Schedule a Virtual Consultation

Exemptions & Credits

Small businesses (first 10,000 square feet of all businesses)
Grocery or Supermarket stores
Seasonal businesses operating less than 90 days.
Residential space
Tax Credits:
1. Hotel tax
2. Certain sales tax paid by a business (2:1, up to 75%)
3. Vacant space

Downtown Business District (BID)

Amount due is based on business location, business category and number of full-time employees (FTE). If your business is located within the BID, you must also pay the BID assessment fee. BID payments after the filing deadline will accrue penalties.

Please note that the 2024 BID assessment has been waived.

Archived Business Registry & Tax Implementation

Questions?

Support Hours

Monday-Friday: 8:00 AM – 5:00 PM

Closed Saturday and Sunday

Contact Information:
Email: PaloAlto@hdlgov.com

Phone: (650) 838-2882

Mailing Address:

City of Palo Alto Processing Center

8839 N. Cedar Ave., #212

Fresno, CA 93720

Already familiar with our Business Registry and Tax Process?

Click here for direct access to our online portal:

Business Registry & Tax Portal

Resources

Appointments

Not sure where to start, have questions on our process, or determine eligibility for a tax offset? Book a virtual appointment to chat with our staff.

Schedule a Virtual Consultation