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California Tax Guide
Most complex state

California —
the most complex state for small business taxes.

Multiple overlapping taxes, an $800 minimum fee that hits even zero-revenue businesses, and the highest income tax rate in the US. Understanding the layers is critical before you operate here.

13.3%Top income tax rate
$800LLC minimum annual tax
8.84%C-Corp tax rate
3Separate tax agencies
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California is the most complex state for small business taxes. Multiple overlapping taxes, an $800 minimum fee owed even at zero revenue, and three separate tax agencies. Read this guide before you operate here.
13.3%
Top income tax rate
Highest individual rate in the US. Standard top rate for most founders is 9.3%–10.3%
$800
LLC minimum annual tax
Owed every year regardless of income — even in year one at zero revenue
8.84%
C-Corp tax rate
On net California income. Minimum $800 franchise tax also applies
1.5%
S-Corp rate
On California net income. $800 minimum still applies regardless
7.25%+
Sales tax base rate
State rate + local additions. Some counties reach 10.75%
1.1%
SDI rate
State Disability Insurance withheld from employee wages — no wage cap since 2024
The three California tax agencies — you deal with all three
FTB
Franchise Tax Board — ftb.ca.govHandles income tax, franchise tax, LLC fees, and S-Corp elections. Your main portal for annual returns, estimated payments, and the $800 minimum tax.Most CA founders deal with this the most
EDD
Employment Development Department — edd.ca.govHandles payroll taxes — SDI withholding, UI contributions, and quarterly employer returns (DE-9, DE-9C). Completely separate from FTB.Required if you have any employees
CDTFA
CA Dept of Tax and Fee Administration — cdtfa.ca.govHandles sales tax and use tax. If you sell tangible goods in California, you register here and file periodic sales tax returns.Required if you sell physical products
The hidden LLC cost most CA founders miss: The $800 annual minimum franchise tax is owed even if your LLC made zero dollars. In your first year it's due on the 15th day of the 4th month after you form — even if you haven't made a sale yet. A brand new LLC formed in January owes $800 by April 15.
California's gross receipts fee stacks ON TOP of the $800 minimum. If your LLC's total annual income exceeds $250,000 you owe an additional $900–$11,790 fee based on revenue tiers. This is separate from income tax and is often a complete surprise to founders hitting growth milestones.

The California franchise tax — fully explained

California's franchise tax is one of the most misunderstood business taxes in the country. It applies to LLCs, S-Corps, C-Corps, and partnerships — each with different rules.

LLC franchise tax + gross receipts fee tiers
$800
All LLCs regardless of revenueThe baseline minimum. Owed every year your LLC exists in California — even zero income, zero profit, operating at a loss. Due April 15.
Always owed
+$900
Revenue $250,000 – $499,999Total annual income triggers an additional fee on top of the $800 base. Total owed: $1,700.
$1,700 total
+$2,500
Revenue $500,000 – $999,999Gross revenue threshold. Total owed: $3,300.
$3,300 total
+$6,000
Revenue $1,000,000 – $4,999,999At this tier the LLC fee becomes a significant line item. Total owed: $6,800.
$6,800 total
+$11,790
Revenue $5,000,000 and aboveTotal LLC tax and fee: $12,590/yr at this tier.
$12,590 total
Corporation franchise tax by entity type
C
C-Corporation: 8.84% on net incomeMinimum $800 franchise tax applies even with zero income. California taxes C-Corps on their California-source income.Min $800 always applies
S
S-Corporation: 1.5% on net incomeCalifornia does NOT fully recognize federal S-Corp status — you must file a separate CA S-Corp election. Minimum $800 still applies.Separate CA S-Corp election needed
P
Partnerships: $800 minimumGeneral partnerships and LPs owe the $800 minimum franchise tax. Income passes through to partners who pay personal income tax.
Dissolving your LLC doesn't stop the clock immediately. If you close your California LLC you must formally dissolve it with the state AND file a final tax return. If you simply stop filing California will continue assessing the $800 annually — indefinitely.
The $800 franchise tax paid to California is deductible on your federal return as a business expense. At the 22% federal bracket that's $176 of your $800 back.

Every California form a small business founder may need

FTB — Franchise Tax Board forms
568
LLC Return of IncomeFiled by single-member and multi-member LLCs. Reports income, deductions, and the franchise tax/fee owed. Required even if no income.
Apr 15
540
CA Individual Income Tax ReturnYour personal state return. Includes Schedule C business income for sole props and single-member LLC owners.
Apr 15
100S
S-Corporation Franchise Tax ReturnFiled by CA S-Corps. Reports the 1.5% entity-level tax plus the $800 minimum. Must file even if operating at a loss.
Mar 15
100
C-Corporation Franchise Tax ReturnFiled by C-Corps. Reports 8.84% on California net income. Minimum $800 applies.
Apr 15
3522
LLC Tax VoucherPayment voucher for the $800 annual LLC minimum tax. Due April 15 each year separate from the Form 568 return.
Apr 15
3536
Estimated Fee for LLCsIf your LLC's annual income is estimated to exceed $250,000 you must prepay the gross receipts fee. Due June 15 — a mid-year payment most founders miss completely.
Jun 15
540-ES
Estimated Tax for IndividualsQuarterly estimated payments for sole props, LLC owners, and S-Corp shareholders. CA has its own schedule — NOT identical to federal.
Quarterly
3804
Pass-Through Entity Tax Election (PTET)Optional election letting S-Corps and partnerships pay CA tax at entity level (9.3%), allowing owners to deduct state taxes on federal return — bypassing the $10k SALT cap.
With return
EDD — Employment Development Department forms
DE-9
Quarterly Payroll Tax ReturnFiled with EDD. Reports employee wages, SDI withheld, and employer UI contributions. Due last day of month following quarter.
Quarterly
DE-9C
Quarterly Wage and Withholding ReportFiled alongside DE-9. Lists individual employees, wages paid, and SDI withheld per employee.
Quarterly
Most CA forms are filed through the FTB at ftb.ca.gov for income and franchise tax. Payroll taxes go through EDD at edd.ca.gov. Sales tax goes through CDTFA at cdtfa.ca.gov. Three separate agencies, three separate portals.

California filing calendar

Every deadline organized by date. Select your entity type.

Jan 15
Q4 federal estimated tax (Form 1040-ES)Covers September 1 – December 31 income
Federal
Apr 15
Form 568 + $800 tax (Form 3522) + Q1 CA estimated taxThree obligations at once — biggest day of the year for CA LLCs
Critical
Jun 15
Q2 CA estimated tax + Form 3536 (if revenue over $250k)CA Q2 is June 15 — one day before federal June 16
Watch out
Sep 15
Q3 federal estimated tax only — no CA payment this quarterCalifornia does NOT have a Q3 estimated payment for most filers
Federal only
Jan 15
Q4 CA estimated tax + Q4 federal estimated taxBoth due same day — pay via EFTPS (federal) and FTB Web Pay (CA)
Both
CA estimated tax schedule is different from federal. California is paid in 3 installments (Apr 15, Jun 15, Jan 15) while federal is 4 (Apr, Jun, Sep, Jan). There is NO September California estimated payment for most individuals.
Mar 15
Form 100S S-Corp return + $800 franchise tax dueOne month before personal returns — K-1s must go to shareholders first
Critical
Mar 15
S-Corp extension (Form 3539) if needed — extends to Sep 15File by March 15 to get the automatic 6-month extension
If extending
Apr 15
Shareholder personal returns due (Form 540)You need your K-1 from the S-Corp before filing personal return
Personal
Sep 15
Extended S-Corp return dueFinal deadline — no further extensions available
Extended
Jan 15
Q4 federal estimated taxForm 1040-ES — covers Sep 1 – Dec 31
Federal
Apr 15
Federal 1040 + Schedule C + CA Form 540 + Q1 CA estimated taxFile federal and state simultaneously
Critical
Jun 15
Q2 CA estimated tax — first CA payment of the yearCA Q2 is due Jun 15, one day before federal Jun 16
CA only
Sep 15
Q3 federal estimated tax only — no CA paymentFederal only this quarter — California skips Q3
Federal only
Jan 15
Q4 federal + Q3 CA estimated tax both duePay both — EFTPS for federal, FTB Web Pay for CA
Both
Jan 31
W-2s to employees · 1099-NECs to contractors · DE-9/DE-9C Q4Three deadlines at once — busiest employer day of the year
Busiest day
Apr 30
DE-9 + DE-9C Q1 payroll return to EDDReport Q1 wages, SDI, and UI contributions
EDD
Jul 31
DE-9 + DE-9C Q2 payroll return to EDDReport Q2 wages, SDI, and UI contributions
EDD
Oct 31
DE-9 + DE-9C Q3 payroll return to EDDReport Q3 wages, SDI, and UI contributions
EDD

Filing extensions — what they do and don't cover

An extension extends the filing deadline — NOT the payment deadline. You must still estimate and pay any taxes owed by the original deadline. Failing to pay on time results in a 5% late payment penalty plus interest.
Fed
Federal personal (Form 1040) — automatic 6 monthsFile Form 4868 by April 15. Extends filing deadline to October 15. Must pay estimated tax owed by April 15 or face late payment penalties.irs.gov or through tax software
CA
California personal (Form 540) — automatic, no form neededCalifornia automatically grants a 6-month extension — you don't need to file a form. Your CA return is automatically extended to October 15 as long as you pay at least 90% of total tax owed by April 15.Pay via FTB Web Pay or Form 3519
S
Federal S-Corp / Partnership — 6 monthsFile Form 7004 by March 15. Extends to September 15. $235/month per-shareholder late filing penalty if missed.Due March 15
LLC
California LLC (Form 568) — automatic 6 monthsCalifornia automatically grants a 6-month extension on Form 568. The $800 minimum franchise tax is still due by April 15.$800 still due April 15 — always
✗
What extensions NEVER coverPayroll tax deposits, quarterly payroll returns (DE-9), sales tax returns, the $800 LLC minimum tax, and estimated tax payment deadlines — none of these can be extended.
Best practice: Even when extending, file as early as possible. If you're extending because your books aren't ready — that's a bookkeeping problem to solve, not a filing problem to defer.

California tax estimator

Estimate your combined federal + California tax burden and quarterly payment schedule.

$80,000
—
$100,000
$12,458
federal income + SE tax
$6,200
CA state income tax
$800
franchise / LLC fee
$19,458
total estimated tax
$4,865
avg. quarterly payment
24.3%
effective total rate
California's combined tax burden is among the highest in the US. For founders earning $80k+ in profit an S-Corp election typically saves $4,000–$10,000/yr in self-employment taxes — partially offsetting the state's high rates.