California LLC Tax Guide — Complete Overview
California is the most expensive state for LLC taxation. Between the mandatory $800 annual franchise tax, progressive state income tax (up to 13.3%), and the additional LLC fee for higher-revenue businesses, California LLC owners face a significant tax burden. This guide covers every obligation. For formation basics, see our CA LLC guide.
Overview of California LLC Tax Obligations
| Tax/Fee | Amount | Applies To | Due |
|---|---|---|---|
| Annual franchise tax | $800 (flat minimum) | ALL CA LLCs | April 15 |
| LLC fee (income-based) | $900-$11,790 | LLCs with CA income >$250K | By original due date of Form 568 |
| State income tax (members) | 1%-13.3% | All CA-source income | April 15 |
| Form 568 (LLC Return) | Informational | All CA LLCs | March 15 (multi-member) or April 15 (single-member) |
| Sales/use tax | 7.25% base + local | LLCs selling taxable goods | Quarterly |
| Employer taxes (EDD) | Various | LLCs with employees | Quarterly |
| Federal income tax | 10%-37% | All LLC income | April 15 |
| Self-employment tax | 15.3% | Active members | April 15 |
The $800 Franchise Tax — California's Minimum
Every California LLC owes $800/year to the Franchise Tax Board — regardless of revenue, profit, or activity. This is non-negotiable.
First-year exemption (expired): The AB 85 exemption applied to LLCs formed 2021-2023. LLCs formed 2024+ owe $800 from their first taxable year onward.
Due date: April 15 each year. Paid with Form 3522 (LLC Tax Voucher). The first payment for non-exempt LLCs is due by the 15th day of the 4th month after formation.
See our franchise tax guide for complete details.
The LLC Fee (Revenue-Based Addition)
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Get StartedOn top of the $800 franchise tax, LLCs with CA-source total income exceeding $250K owe an additional fee. See our LLC fee guide.
California State Income Tax (13.3% Maximum)
California has the highest state income tax rate in the country. LLC income passes through to members who pay CA income tax at their marginal rate. See our state income tax guide.
Sales Tax
California's base sales tax is 7.25% (highest state base rate in the US) plus local additions up to 10.75% combined. See our sales tax guide.
FAQ
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Get StartedWhat is the absolute minimum annual tax cost for a CA LLC?
$800 (franchise tax) — regardless of income. Plus state income tax on any CA-source profit. Plus agent fees. Minimum realistic annual cost: $900+ even with $0 revenue.
Can I avoid the $800 by forming in another state?
Only if you have NO California presence. If you "do business" in CA , you owe the $800 whether domestic or foreign LLC. California aggressively enforces this.
Is the S-corp election beneficial in California?
Yes — saves self-employment tax (federal benefit). However, S-corps in California pay a 1.5% net income tax (minimum $800) instead of the $800 flat franchise tax. For high-profit LLCs, the S-corp California tax can exceed $800. Analyze carefully.