Business Tax Reforms

The Business Tax Reforms effective January 1, 2006 in the City of Los Angeles 's Office of Finance is outlined below.

$92 Million Business Tax Relief Package

The Mayor and City Council approved new business tax reform measures, which will provide over $92 million dollars in business tax relief in California. These measures are effective January 1, 2006 and are part of the City's continuing effort to retain and attract new businesses. To take advantage of these reforms, you must be registered with the Office of Finance and file your business tax returns on or before February 28, 2006.

Business Tax Rate reduction

Over 260,000 businesses will enjoy an automatic 3.1 % reduction of their business taxes. Further reductions up to a 15% maximum threshold are anticipated for future years. The benefit to all City businesses is estimated to be $60 million when fully implemented.

For registered businesses, please refer to your renewal forms mailed to you in December 2005 from the Office of Finance for your new rate (s).

Small Business Tax Exemption

Businesses with total gross receipts under $50,000 will pay no tax. Exemption will increase to $100,000 in 2007 affecting 61 % of taxpayers. However, the small business exemption only apply if you file your annual tax return on or before February 28,2006.

Creative Artist Exemption

Certain entertainment creative activities will qualify for an exemption of up to $300,000 in total gross receipts. Approximately 85% of entertainment related businesses would qualify for this exemption. Note that the creative artist exemption only apply if you file your annual tax return on or before February 28,2006.

Motion Picture, Television and Radio Producers

Changes to the way that taxes are calculated will provide relief to small and medium sized production companies. This eliminates 44 tax ranges and decreases taxes at all levels of production cost. This also raises the floor at which the minimum tax is paid from $50,000 to $2.5 million. Taxes are capped at $12,495.

For more information, call the Office of Finance at (213) 473-5901.