Redwood City, CA Local Taxes & Fees: Business Tax Classification (2026)

Section 32.151 splits the annual business license tax into an 'annual registration fee' set by Section 32.152 and an 'incremental tax' set by Section 32.154. The registration fee is a flat $90.00, effective July 1, 2025. The incremental tax is assessed per employee and varies by the categories Section 32.154 lists: General Commerce and Retail pays $10 per employee for 1-3 employees, $50 for 4-10, and $80 for 11 or more; Contractors pay a flat $150 per employee; Services pay $130; Professional Services is graduated at $175 for the first three employees, $200 for employees 4 through 10, and $250 for employee 11 and up; Rental (Residential) pays $31.00 per unit; and Rental (Commercial) pays $75.00 per 1,000 square feet. Section 32.154(A) phases the increase in over one year: only 50% of these rates applied from July 1, 2025, with the full rate taking effect July 1, 2026 (residential rental was never phased in and started at the full rate). Section 32.154(C) illustrates the math: a six-employee retail business owes $300 at the full 2026 rate, while a six-employee professional-services business owes $1,125 because the rate is graduated rather than flat.

No single business can be taxed more than $250,000 in a year regardless of category, per the maximum set in Section 32.155. The City Council can adjust rates by resolution without voter approval under Section 32.153, but it cannot exceed these statutory maximums or raise the $250,000 cap itself. Starting July 1, 2027, and every July 1 after, Section 32.156 automatically adjusts every rate, including the $250,000 maximum, by the Bay Area CPI published each February, and a rate can never be pushed below its prior level by that adjustment.