The measure passed by the Board of Supervisors exempts the company from paying payroll tax on new hires if it moves to the city's neglected Mid-Market area.
The exemption applies to any business in that neighborhood.
Analysts say Twitter is already outgrowing its current San Francisco headquarters, and the company is poised to expand from a few hundred to a few thousand workers.
Critics, including the city's largest employees union, have called the plan an ill-conceived corporate giveaway that will lead other companies to issue ultimatums demanding similar treatment.
The debate comes at a time when the city's high tech startup scene teems with energy not seen since before the first Internet bubble burst in 2000.
The Associated Press contributed to this report.