California LLC Fee — Revenue-Based Additional Tax
On top of the $800 franchise tax, California LLCs with California-source total income exceeding $250,000 owe an additional "LLC fee." This is based on gross income (total revenue), NOT net profit — making it particularly painful for high-revenue, low-margin businesses. For the complete picture, see our CA LLC tax guide.
Fee Schedule
| CA-Source Total Income | LLC Fee |
|---|---|
| Under $250,000 | $0 |
| $250,000 - $499,999 | $900 |
| $500,000 - $999,999 | $2,500 |
| $1,000,000 - $4,999,999 | $6,000 |
| $5,000,000 and over | $11,790 |
Critical: This is based on TOTAL INCOME (gross revenue), not net profit. An LLC with $1M in revenue but only $50K in profit still owes $6,000.
Key Details
- In addition to the $800 franchise tax (you pay both)
- Due with Form 568 (LLC Return of Income) — same filing deadline
- CA-source — only revenue from California operations counts (apportioned if multi-state)
- Estimated payment required: If you expect to owe the LLC fee, you must make an estimated payment by June 15 of the current year using Form 3536
How "Total Income" Is Calculated
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Get StartedPer FTB instructions, total income = gross receipts minus returns and allowances. It is NOT reduced by:
- Cost of goods sold
- Operating expenses
- Salaries or contractor payments
- Any other deductions
This means the LLC fee hits businesses with thin margins disproportionately. A restaurant with $1.5M in revenue and $75K in profit owes $6,000 in LLC fee plus $800 franchise tax = $6,800 to California before any income tax.
FAQ
Can I deduct the LLC fee on my federal return?
Yes. Both the $800 franchise tax and the LLC fee are deductible as ordinary business expenses on the LLC's federal return.
Does the LLC fee apply to out-of-state revenue?
Only California-source total income counts. If your LLC earns $2M total but only $400K from California operations, the fee is based on $400K (resulting in $900, not $6,000).
Is there any way to reduce the LLC fee?
Structure matters. If you have multiple distinct business activities, separating them into different LLCs can keep each below the threshold. But each additional LLC also owes $800 in franchise tax — so the math only works if the fee savings exceed $800.