How Measure R would change Albany’s business license tax
More than 70% of retail and service businesses would pay less under the new system, officials say.
Albany voters will decide Nov. 3 whether the city should change how it calculates business license taxes, from employee count to gross receipts.
Measure R is projected to generate an additional $600,000 annually for general services, such as "fire protection, public safety, environmental and community service programs," according to city materials.
The measure requires a simple majority to pass and, if approved, would take effect Jan. 1, 2027.
Albany’s current business license tax uses flat rates or the average number of employees, depending on the business.
Under Measure R, most business license taxes would be based on gross receipts, the amount received before expenses.
The city collected $1,256,982 in business license tax revenue during fiscal year 2025-26, city spokesperson Brennen Brown confirmed.
Most Albany businesses now pay $382 for an owner/sole employee each year plus $78 for each additional full-time-equivalent employee.
The measure would continue to exempt qualifying charitable, religious, government and educational organizations from the tax.
The City Council unanimously approved placing Measure R on the November ballot at its July 20 meeting.
That evening, city finance director Reina Schwartz told council members that the new structure "allows for greater distribution of tax burden across smaller businesses."
More than 70% of retail and service businesses would pay less under the new system, officials say.
Overall, 85% of Albany businesses would get a tax cut, a council member said in September, citing a consultant’s analysis.
Local businesses gave input on Measure R
The Albany City Council revised the proposal after business owners and community members highlighted problems with earlier drafts, said Tod Abbott, a member of the Albany Chamber of Commerce board.
One issue, he said, was that businesses have different profit margins. Retail businesses may operate on margins of 30% or less, while some service businesses may have margins approaching 100%.
The proposal addresses those differences by establishing different rates for different business types and a flat rate for smaller businesses, Abbott said.
The lower rate for retailers also recognizes that they generate sales-tax revenue for the city, according to a June staff report.
The chamber did not take an official position on the measure.
What's the new structure under Measure R?
According to the city attorney’s impartial analysis, residential landlords would continue to pay up to $120 per rental unit if voters approve Measure R.
General retailers would pay up to $50 for annual gross receipts of $50,000 or less, up to $200 for receipts above $50,000 through $200,000, and an additional 0.1% of gross receipts above $200,000.
Most other businesses, including commercial landlords, contractors and professional and nonprofessional service businesses, would face the same $50 and $200 base taxes, with an additional 0.5% of receipts above $200,000.
The measure would allow the City Council to set rates below those maximums.
The $50 and $200 base taxes, along with the gross-receipts thresholds, would be adjusted annually for inflation, up to 3%. The 0.1% and 0.5% rates would remain fixed.
At a September forum on local ballot measures hosted by the Albany Democratic Club, Albany City Councilman John Miki said most cities that have modernized their business license tax systems have switched to gross receipts.
"When you look at it, this is a very minimal tax, and much more equitable," one forum attendee observed. "It is the very wealthy, very high-gross-receipt businesses that are going to pay more."
Berkeley, Alameda and Richmond base their business license taxes on gross receipts. El Cerrito, like Albany, bases its tax on the number of employees.
The League of Women Voters of Berkeley, Albany and Emeryville supports Measure R, arguing that an employee-based tax can penalize businesses for hiring workers, while a tax based on gross receipts more closely reflects "the scale of the business's economic activity."
HdL Companies, which administers Albany’s business licenses, did not provide a list of Albany businesses that would pay more under the measure.
But a June analysis by HdL estimated potential increases for grocery stores, dental practices, contractors and commercial rental businesses under earlier versions of the proposal.
The estimates relied on averages from other sources because Albany does not collect gross-receipts data for individual businesses, Brown said.
Allyson Aleksey
Francesco Papalia, a Realtor who served on the city’s Financial Advisory Committee, argues that taxing revenue without deductions for expenses such as rent, inventory and payroll would unfairly burden businesses with low profit margins.
"Businesses like grocery stores, which have an extremely low margin of profit (2%-3%) will end up paying a much higher tax on their actual net income," he wrote in the argument against Measure R. "It is a tax on money that they do not make. It is an unfair regressive income tax."
Papalia has argued that the city needs the money in part because Golden Gate Fields could come off the tax rolls and says legislators must do more to help Albany taxpayers.
"Albany needs a better deal with the State that will justly compensate us for all of this lost tax revenue," he wrote.
At a council meeting in July, the city's finance director said Measure R would fund general services and was not related to changes at Golden Gate Fields.
Albany council members — who have uniformly endorsed all six city measures on the November ballot — have argued that Measure R will lower taxes "for a supermajority of businesses providing goods and services, including virtually all small businesses."
"Businesses with greater revenues would contribute proportionately, creating a fairer relationship between tax responsibility and business activity," they wrote.
There are about 2,500 active business licenses in Albany, the city said.
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