Merced, CA Local Taxes & Fees: Business Tax Classification (2026)
Key Facts
- Governing chapter
- Municipal Code Chapter 5.08, License Taxes
- Classifications
- A, B, C, D by gross profit margin
- Lowest tier
- $20/year for Class A under $3,000 gross
- Election deadline
- 90 days before the tax year (5.08.015)
- Late penalty
- 25% if unpaid within 30 days (5.04.240)
- Enforcing officer
- City finance officer
Summary
Merced sorts every business into one of four gross-receipts classifications, A through D, based on the trade's profit margin, then taxes annual gross receipts on a sliding scale set in Municipal Code Section 5.08.020. A jewelry store or utility falls in Classification A; groceries and dry cleaners land in B; auto dealers and service stations in C; everything else defaults to D.
Every person who sells or offers for sale any goods, wares, or merchandise, except as otherwise provided in this chapter, either as principal or agent, whether on commission or otherwise, and whether for present or future delivery, or whether goods, wares or merchandise are owned or consigned to such person, and every person carrying on or conducting the business or occupation as set forth in this section, or who furnishes water service, gas or gas service, electricity or electric service, telephones or telephone service for domestic or other uses, and every person engaged in any other kind of lawful business not otherwise mentioned in this chapter shall pay an annual license based upon annual gross receipts at the following classifications... and other businesses not listed above, operating on a gross profit of thirty (30) percent or more will be classified in this category.
Official source re-checked September 7, 2026: no newer edition of the code had been published (publisher’s edition: Code of Ordinances: Supplement 85 - 1-26).
Full Breakdown
08 according to its gross profit margin. Classification A covers businesses that clear a 30 percent or higher gross profit margin, such as auto parts stores, jewelers, hardware stores, and utilities providing water, gas, telephone, or electric service. Classification B (17 percent margin) covers bakeries, groceries, dry cleaners, and restaurants. Classification C (10 to 17 percent) covers service stations, wholesalers, and new and used vehicle dealers. Classification D catches every other business operating at 10 percent or under. 020 sets an annual gross-receipts rate table for each tier: a Classification A business grossing $3,000 or less pays $20 a year, rising in fixed brackets as gross receipts climb. 015(C) defaults the business to the base rate. 010 directs the finance officer to license every business under either the gross-receipts or base-rate track.
Violations & Fines
License fees are due in advance; Section 5.04.240 imposes a 25 percent penalty on any license not paid within thirty days of the due date, and daily licenses owe the same 25 percent penalty if not paid before the licensed activity begins. Section 5.04.110 makes it a misdemeanor, subject to an administrative citation under Chapter 1.10, to fail to file a required statement or to file a false one; late statements also draw a 25 percent penalty that compounds every thirty days up to 100 percent of the amount due.
Frequently Asked Questions
Which classification does my Merced business fall into?
Can I choose to be taxed under the base rate instead of gross receipts?
What happens if I pay my Merced business license late?
Sources & Official References
Other rules in Merced
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