California LLC Fee vs. the $800 Franchise Tax
Two separate charges on every California LLC: the flat annual tax and the gross-receipts fee.
A California LLC can owe two different charges. The $800 annual tax (often called the franchise tax) is owed every year by every LLC doing business in or registered with California, even with no income. The LLC fee is a separate, tiered charge from $900 to $11,790 that applies only once the LLC's total California income reaches $250,000.
The $800 annual tax
Revenue and Taxation Code 17941 charges every LLC doing business in California, or whose articles of organization or registration have been accepted by the Secretary of State, an annual tax equal to the corporate minimum franchise tax: $800. It's owed whether or not the LLC is active or profitable, until the LLC is cancelled.
- Due: 15th day of the 4th month of the taxable year (formation month counts as month 1), paid with FTB 3522. For a calendar-year LLC that is April 15.
- First year: the 2021-2023 first-year exemption has ended. LLCs whose first taxable year begins on or after January 1, 2027 and before January 1, 2030 will pay $400 for that first year only, then $800.
The LLC fee
Revenue and Taxation Code 17942 adds a fee based on the LLC's total income from all sources derived from or attributable to California. That is gross income plus cost of goods sold, so it works like a gross-receipts test, not a profit test.
| Total California income | LLC fee |
|---|---|
| $0 – $249,999 | $0 |
| $250,000 – $499,999 | $900 |
| $500,000 – $999,999 | $2,500 |
| $1,000,000 – $4,999,999 | $6,000 |
| $5,000,000 or more | $11,790 |
- Due: estimate and pay by the 15th day of the 6th month of the tax year (June 15 for calendar-year LLCs) with FTB 3536. The balance is due with Form 568.
- Underpayment: a 10% penalty on the shortfall between the fee owed and what you paid by the 6th-month date. There is no penalty if the estimate was at least the prior year's total fee.
- Splitting up doesn't help: FTB can combine commonly controlled LLCs formed mainly to reduce the fee.
An example
An LLC with $600,000 in California gross receipts and a small profit owes the $800 annual tax plus a $2,500 fee, $3,300 in total. The fee estimate is due in June and the annual tax in April. With $249,999 in receipts, the same LLC would owe only the $800.
LLCs taxed as corporations
An LLC must use the same tax classification for California as for federal purposes. If it elects to be taxed as a C or S corporation with the IRS, FTB treats it as a corporation: it files Form 100 or 100S and pays the corporate franchise tax instead of filing Form 568. See California LLC vs. S Corp Taxes for how those numbers compare.
Run your numbers
The LLC Franchise Tax Calculator works out the annual tax, the gross-receipts fee and the due dates from your formation date and income. The LLC Annual Filing Deadline Checker lists the filings that come with them.
Frequently Asked Questions
Is the LLC fee the same as the $800 franchise tax?
No. The $800 annual tax (R&TC 17941) is owed by every LLC doing business in or registered with California. The LLC fee (R&TC 17942) is a second charge that applies only once total California income reaches $250,000.
What counts as income for the LLC fee?
Total income from all sources derived from or attributable to California: gross income plus cost of goods sold. In practice it is close to California gross receipts, not profit, so an LLC can owe the fee even in a year it loses money.
When is the LLC fee due?
The estimated fee is due by the 15th day of the 6th month of the tax year (June 15 for a calendar-year LLC), paid with FTB 3536. Underpaying adds a 10% penalty on the shortfall, unless the estimate was at least the prior year's fee.
Do new LLCs pay the $800 tax in their first year?
Yes, for LLCs formed today. The first-year exemption only covered LLCs formed in 2021-2023. An LLC whose first taxable year begins in 2027 through 2029 will pay $400 for that first year only.
This article is for general information only and is not tax advice. Sources: Revenue and Taxation Code 17941 and 17942; FTB Limited liability company and LLC treated as a corporation pages; FTB 3522 and 3536.