California LLC Franchise Tax & State Income Tax
California imposes both a minimum franchise tax ($800/year on the LLC entity) AND state income tax (up to 13.3% on members personally). This double layer makes California the most expensive state for LLC taxation. For the complete picture, see our CA LLC tax guide.
The $800 Annual Franchise Tax
What it is: A minimum tax every California LLC must pay annually to the Franchise Tax Board (FTB). Not based on income — it is a flat $800 regardless of revenue or profit.
Due date: April 15 each year. Paid with Form 3522 (LLC Tax Voucher). First payment for non-exempt LLCs: 15th day of the 4th month after formation.
First-year exemption (expired): The AB 85 first-year exemption applied to LLCs formed in 2021-2023. LLCs formed in 2024 or later owe the full $800 franchise tax starting in their first taxable year.
Cannot be avoided if you operate in CA: Whether your LLC is domestic (formed in CA) or foreign (registered in CA), the $800 applies if you "do business" in California per the California Revenue and Taxation Code.
State Income Tax (Members)
California state income tax applies to LLC members on their CA-source income at progressive rates:
| Taxable Income (Single) | Rate |
|---|---|
| $0 - $10,412 | 1% |
| $10,413 - $24,684 | 2% |
| $24,685 - $38,959 | 4% |
| $38,960 - $54,081 | 6% |
| $54,082 - $68,350 | 8% |
| $68,351 - $349,137 | 9.3% |
| $349,138 - $418,961 | 10.3% |
| $418,962 - $698,271 | 11.3% |
| $698,272 - $1,000,000 | 12.3% |
| Over $1,000,000 | 13.3% (includes 1% Mental Health Services Tax) |
13.3% is the highest state income tax rate in the US. For high-earning LLC members, California takes a substantial cut of pass-through income.
How They Work Together
A California LLC member earning $200K net profit from the LLC owes:
- $800 franchise tax (paid by LLC entity)
- ~$14,000 in CA state income tax (paid by member personally)
- Federal income tax + self-employment tax (separate)
- Potential LLC fee (if gross income >$250K)
Total CA state burden on $200K: approximately $14,800 (franchise tax + income tax).
FAQ
Does the $800 franchise tax apply even if my LLC has no revenue?
Yes. Even dormant LLCs with $0 revenue owe $800/year until formally dissolved with both the SOS and FTB.
Do non-resident members owe California income tax?
Yes — on their share of the LLC's California-source income (apportioned if the LLC operates in multiple states). Non-residents file Form 540NR.
How do I stop the $800 from accruing?
File Certificate of Dissolution (Form LLC-4/7) with the SOS AND file final Form 568 with the FTB. Both steps are required. Simply letting the LLC go dormant does NOT stop the tax.