How San Jose Handles Local Taxes & Fees: A Practical Guide

San Jose maintains 273 local ordinances across all categories, and 5 of those deal specifically with local taxes & fees. Here is a breakdown of what the city actually requires, what is prohibited, and where San Jose falls on the strict-to-permissive spectrum compared to other cities.

Mansion Tax (Measure ULA)

Measure E, approved by San Jose voters in 2020 and codified at SJMC 4.59, imposes a tiered real property transfer tax on sales above $2 million. Rates rise from $7.50 per $1,000 to $15 per $1,000, with revenue dedicated to affordable housing and homelessness prevention.

Key details: Code: SJMC Chapter 4.59. Threshold: $2 million sale price. Top rate: $15 per $1,000 above $10M. Approved: Measure E, March 2020. Use: Affordable housing, homelessness.

Failure to pay the SJMC 4.59 transfer tax is a debt to the city with interest and penalties. Title companies typically collect at closing; underreporting sale price can trigger civil penalties and DA referral.

Parking Tax

SJMC Chapter 4.74 imposes a 10% Parking Tax on the gross receipts of every commercial parking lot, garage, and valet operator in San Jose. Operators collect from customers, file monthly returns with the Finance Department, and remit, with audits and penalties for non-collection.

Key details: Code: SJMC Chapter 4.74. Rate: 10 percent of parking fee. Filing: Monthly returns to Finance. Records: Four-year retention required. Exclusions: Residential, free, retail-incidental.

Failure to collect, file, or remit the SJMC 4.74 Parking Tax is a misdemeanor with penalties up to 25% plus interest. Operators who collect but fail to remit face conversion charges; chronic violators go to the City Attorney.

Vacancy Tax

San Jose voters approved Measure M in November 2024 authorizing an Empty Homes Tax on residential units left vacant more than half the year. Owners must self-report annually; revenue funds affordable housing and homelessness services, with exemptions for owner death, repairs, and active marketing.

Key details: Approved: Measure M, November 2024. Trigger: Vacant more than 182 days yearly. Filing: Annual owner declaration required. Exemptions: Repairs, death, listing, primary home. Revenue use: Affordable housing, homelessness.

Filing a false occupancy declaration is enforceable as a misdemeanor or administrative penalty. Unpaid Empty Homes Tax becomes a lien on the property with interest; chronic noncompliance refers to the City Attorney for prosecution.

This is not one of those rules that cities tend to ignore. San Jose actively enforces its vacancy tax requirements.

Affordable Housing Linkage Fee

SJMC Chapter 18.27 requires residential developers of 20 or more units to make 15% of units affordable or pay an in-lieu fee. SJMC Chapter 18.31 imposes a Commercial Linkage Fee on new office, R&D, and warehouse projects to fund affordable housing.

Key details: Inclusionary code: SJMC Chapter 18.27. Linkage fee code: SJMC Chapter 18.31. Inclusionary trigger: 20 or more residential units. Inclusionary set-aside: 15 percent affordable units. Fund: Affordable Housing Trust Fund.

Failure to record affordability covenants or pay in-lieu fees blocks building permits and certificates of occupancy under SJMC 18.27 and 18.31. Misrepresenting unit counts or buyer income can void covenants and trigger Housing Department enforcement.

Business Tax Classification

SJMC Chapter 4.76, modernized by Measure G in 2016, taxes every business operating in San Jose based on gross receipts and number of employees. The tax includes a small-business exemption, annual CPI indexing, and a base unit charge plus per-employee charges for larger employers.

Key details: Code: SJMC Chapter 4.76. Modernized: Measure G, November 2016. Structure: Base plus per-employee, tiered. Indexing: Annual CPI adjustment. Small-business: Exemption below set threshold.

Operating without a current SJMC 4.76 Business Tax certificate is a misdemeanor with penalties, interest, and back-tax liability. Misrepresenting gross receipts or employee counts can trigger DA referral for tax fraud and liens on business assets.

The Bottom Line

San Jose's local taxes & fees rules are a mixed bag. Some areas are strict, others are relaxed, and the details matter. The best approach is to check the specific rule that applies to your situation rather than assuming San Jose is broadly strict or permissive.

Keep in mind that San Jose can amend these rules at any council meeting. For the most current version of any rule mentioned here, check the specific ordinance page, where we track updates as they happen.