California's $800 tax: who pays it, when it is due, and the first-year rules

What the $800 is

The Franchise Tax Board calls it the annual tax for an LLC and the minimum franchise tax for a corporation. The rules for each are below.

LLCs

The Franchise Tax Board says: "Every LLC that is doing business or organized in California must pay an annual tax of $800." That covers single-member LLCs and LLCs with several members.

An LLC with California total income of $250,000 or more also owes a separate LLC fee on top of the $800. The fee is shown later on this page.

Corporations

A corporation pays tax on its income. Apart from the exceptions on this page, it pays at least the $800 minimum franchise tax. The Franchise Tax Board lists the usual rate as 8.84% for a C corporation (a regular corporation) and 1.5% for an S corporation (one that chose a special federal tax status). Banks and financial companies have different rates.

For an LLC that chose to be taxed as a corporation, the Franchise Tax Board points to its LLCs treated as corporations page.

Sources: the Franchise Tax Board's LLC page, C corporation page and S corporation page.

Before you file or pay anything based on this page, confirm the details with the official source or a licensed professional.

The first year

This is where most of the confusion is. Here is what the Franchise Tax Board says, in its own dates.

1. The old LLC exemption has ended

   The Franchise Tax Board says the first-year exemption applied "for tax years beginning on or after January 1, 2021, and before January 1, 2024." LLCs in that window did not owe the $800 for their first tax year. That window is over.

2. A new $400 first year for LLCs, starting 2027

   The Franchise Tax Board's what's new page says that for taxable years beginning on or after January 1, 2027, and before January 1, 2030, the annual tax for an LLC that is required to file a return in California "is reduced from $800 to $400 for its first taxable year." It applies only to the first taxable year. The same page lists limited partnerships and limited liability partnerships too.

3. New corporations skip the minimum in year one

   The Franchise Tax Board says newly incorporated or qualified corporations "are not required to pay the minimum franchise tax in their first year." A corporation can still owe tax on its income for that year.

Amounts and deadlines can depend on a company's own facts. A tax professional can confirm what applies to yours.

When it is due

The dates below are the ones the Franchise Tax Board publishes. If a due date falls on a weekend or holiday, it moves to the next business day.

Sources: the Franchise Tax Board's LLC page, C corporation page and business due dates page.

Paying is not the same as filing

The tax payment and the tax return have separate deadlines. The return is filed after the tax year ends. The Franchise Tax Board lists these general return dates:

The Franchise Tax Board's extension page says: "An extension to file your tax return is not an extension to pay." The business due dates page covers other kinds of owners.

The extra LLC fee

An LLC with California total income of $250,000 or more owes an LLC fee on top of the $800.

The Franchise Tax Board says the fee is estimated and paid by the 15th day of the 6th month of the tax year, with form FTB 3536. Underpaying the estimate can bring a 10% penalty. FTB Publication 3556 explains the exception.

Sources: the Franchise Tax Board's LLC page and Publication 3556.

If it is paid late

The Franchise Tax Board's penalties and interest page lists these charges:

• Late payment: 5% of the unpaid tax, plus 0.5% for each month it stays unpaid, for up to 40 months.
• Late return for an LLC taxed as a partnership: $18 for each member, for each month, for up to 12 months.
• Interest on top of the unpaid amount.

The Franchise Tax Board can also suspend a company that does not file its returns or pay what it owes. Our suspension guide explains what that means.

No income, or closing down

The Franchise Tax Board says LLCs "organized or registered in California are subject to the annual tax even if they conduct no business in California." Its LLC page says the tax "will be due, even if you are not conducting business, until you cancel your LLC." The Franchise Tax Board's conditions for the tax to stop are listed below.

The Franchise Tax Board lists a few narrow exceptions:

• The 15-day rule. An LLC is not subject to the annual tax and fee if it did no business in California during the tax year and the tax year was 15 days or less.
• The LLC short form. An LLC that cancels with the Short Form Cancellation Certificate (form LLC-4/8) within 12 months of forming is not subject to the $800 annual tax for its first tax year, if it meets that form's conditions.

To stop the tax for future years, the Franchise Tax Board looks for a final return filed on time, no business in California after that year, and the Secretary of State closing documents filed within 12 months of the final return. For an LLC, it also lists paying the $800 for the tax year of the final return. Our guide to closing a California business covers this.

Sources: FTB Publication 3556, FTB Publication 1038 and the Franchise Tax Board's LLC page.

Common surprises

These are the general rules the state publishes, not advice for your company. Check with a licensed professional before acting on them.

Questions about the $800 tax

Related guides

• Start a businessHow a California LLC or corporation is formed, step by step
• Closing a businessThe final-year $800 and the 15-day rule
• Suspended businessWhat FTB suspended and SOS suspended mean, and how revival works
• Statement of InformationThe separate filing with the Secretary of State