City Council
Staff Report
From: City Manager
Report Type: INFORMATION REPORTS
Lead Department: Administrative Services
Meeting Date: May 4, 2026
Report #:2512-5679
TITLE
Q4 CY 2025 Sales Tax Digest (October - December 2025)
ANALYSIS
This report transmits information regarding the City of Palo Alto’s sales tax receipts for the fourth quarter (October - December) of 2025. Highlights from the report are included below. Detailed discussion and data can be found in the Sales Tax Digest (Attachment A).
Regional and statewide sales tax - Benchmark Year (Attachment A, pg. 2):
Palo Alto: decreased by 5.1%
San Francisco Bay Area: decreased by 2.3%
California statewide: decreased by 2.9%
City’s most significant activity – Benchmark Year (Attachment A, pg. 1):
Business to Business – Leasing: decreased by 82.2%; represents 3.6% of total sales tax Transportation – New autos: decreased by 12.2%; represents 12.0% of total sales tax These two segments account for over 15% of Palo Alto’s total sales tax for the period and were the primary drivers of the overall decline.
County Pool – 2024Q4 compared to 2025Q4 (Attachment A, pg. 4) Total County Pool: Increased by 23.1% or $7.2 million, from $31.3 million to $38.4 million Total Jurisdiction Share:
oPercent of county pool increased by 80 basis points, from 5.9% to 6.7% oTotal share increased $0.7 million, from $1.8 million to $2.6 million Over the most recent four quarters, the City received approximately $7.5 million from the County Pool, representing about 22% of the City’s total sales tax revenue of $35.7 million during that period. Further analysis is required to determine the factor(s) contributing to this increase and whether it’s an isolated or ongoing increase.
ATTACHMENTS
Attachment A: 2025 Q4 Sales Tax Digest Summary
APPROVED BY:
Lauren Lai, Administrative Services Director