California LLC $800 Minimum Franchise Tax (2026) — What It Is & How to Pay

What Is the California LLC $800 Franchise Tax?

California Revenue and Taxation Code Section 17942 imposes an annual minimum franchise tax on every LLC that is organized in California or that is registered to do business in California as a foreign LLC. The minimum amount is $800 per taxable year, and it applies regardless of whether the LLC generated any revenue, had any employees, or was even actively operating.

The tax is administered by the California Franchise Tax Board (FTB) — the same agency that collects personal income tax. Despite the name 'franchise tax,' it is not a tax on franchises in the common sense. In California, 'franchise tax' simply refers to the privilege of doing business in the state. Every LLC pays it as the price of maintaining a legal existence in one of the world's largest economies.

The $800 tax is distinct from California's additional LLC fee, which can apply when total California income is $250,000 or more. See the income-based fee section below for the statutory tiers.

When Is the $800 Tax Due?

For most California LLCs, the $800 annual tax is due by the 15th day of the 4th month of each taxable year. For calendar-year LLCs (which most single-member LLCs use), that means April 15. For fiscal-year LLCs, it is the 15th day of the 4th month of their fiscal year.

A new calendar-year LLC generally pays by the 15th day of the fourth month of its taxable year. Confirm the date shown in the current Form 3522 instructions, especially for short tax years or a fiscal-year entity.

Calendar-year LLCs generally use the April 15 schedule and Form 3522 for the $800 tax. An LLC expecting total California income of $250,000 or more may also use Form 3536 for the estimated LLC fee.

• Calendar-year LLCs: April 15 each year
• Fiscal-year LLCs: 15th day of the 4th month of your fiscal year
• New LLCs: check the current Form 3522 instructions for the first taxable year's deadline
• Form 3522 must accompany each annual $800 payment
• Form 3536 is used for estimated LLC fees when total California income is $250,000 or more

The Temporary First-Year Exemption Has Ended

California's temporary general exemption applied to an LLC's first taxable year only for tax years beginning on or after January 1, 2021 and before January 1, 2024. It does not provide a blanket first-year exemption to an LLC formed in 2026.

A newly formed LLC should generally budget the $800 tax in its first taxable year. A narrow short-form cancellation exception can apply when an LLC files the required cancellation documents within 12 months and satisfies every FTB condition; that rule is not a general operating-business waiver.

Example: an LLC formed in March 2026 should generally include the $800 annual tax in its 2026 startup budget and confirm its payment deadline using the current FTB instructions.

Check the FTB's current LLC page and Form 3522 instructions before paying. The result can differ for cancelled entities and other statutory exceptions.

How to Pay: Form 3522 and Form 3536

The FTB provides two forms for LLC tax payments, and confusing them is a common mistake:

• Form 3522 (LLC Tax Voucher): Used to pay the $800 annual minimum franchise tax. Every LLC that owes the minimum tax files this form.
• Form 3536 (Estimated Fee for LLCs): Used when an LLC expects total California income of $250,000 or more. It is generally due by the 15th day of the 6th month of the taxable year.

Step-by-step payment process using FTB Web Pay (recommended):

• Go to ftb.ca.gov and navigate to 'Make a Payment' under the Business section.
• Select 'Web Pay for Businesses' and choose 'LLC' as your entity type.
• Enter your California Secretary of State (SOS) number and your LLC's Federal Employer Identification Number (FEIN).
• Select the tax year you are paying and choose the payment type: 'Annual LLC Tax' for the $800 minimum.
• Enter your bank account details for ACH debit and submit. You will receive a confirmation number — save it.

You can also mail a check payable to 'Franchise Tax Board' along with the paper Form 3522 voucher to: Franchise Tax Board, PO Box 942857, Sacramento, CA 94257-0631. If you mail a payment, allow 7–10 business days and keep your certified mail receipt.

California LLCs must also file Form 568 (LLC Return of Income) annually by the 15th day of the 3rd month after the close of the taxable year (March 15 for calendar-year LLCs). Form 568 is the annual information return and reports gross receipts, deductions, and the $800 tax — it is separate from the payment voucher.

What Happens If You Miss the Deadline?

The FTB enforces the $800 minimum tax aggressively. Missing the April 15 due date triggers an immediate $100 late payment penalty under California Revenue and Taxation Code Section 19132, plus daily interest on the unpaid balance at the current FTB interest rate (approximately 7–9% annualized, adjusted quarterly).

If you continue to miss payments, the FTB can place your LLC on the 'Suspended' or 'Forfeited' list maintained by the California Secretary of State. A suspended LLC cannot legally do business in California, enter contracts, or maintain lawsuits. Reinstating a suspended LLC requires paying all back taxes, penalties, interest, and a $100 reinstatement fee to the SOS.

• $100 late payment penalty applied immediately after the due date
• Interest accrues daily on the unpaid balance
• FTB can issue a Notice of Tax Lien against LLC assets
• Continued non-payment leads to administrative suspension by the SOS
• Suspended LLCs cannot transact business, sue, or be defended in court
• Reinstatement requires clearing all back taxes, penalties, and paying a $100 SOS fee

If you missed a payment and need to get current, pay immediately online via FTB Web Pay. The penalty for late payment of the annual tax is fixed at $100, but interest compounds daily, so acting quickly minimizes the total cost. You can request a penalty abatement from the FTB if this is your first-time offense and you can show reasonable cause — call the FTB Business Entity line at (800) 852-5711.

Income-Based LLC Fee: When You Owe More Than $800

California also imposes an additional LLC fee based on total California income. It applies on top of the $800 annual tax. The statutory tiers are:

• $0–$249,999 in total California income: no additional LLC fee
• $250,000–$499,999: $900 additional fee
• $500,000–$999,999: $2,500 additional fee
• $1,000,000–$4,999,999: $6,000 additional fee
• $5,000,000 or more: $11,790 additional fee

Total California income is a statutory sourcing calculation. Do not assume it always equals invoices to California clients or customers. Use the current Form 568 instructions or qualified tax advice for the LLC's facts.

The LLC fee is estimated and paid during the year using Form 3536, due by the 15th day of the 6th month of your taxable year (June 15 for calendar-year filers). You reconcile the actual fee on your annual Form 568. If your estimated fee was too low, you may owe additional amounts when you file Form 568 in March.

Foreign LLCs Operating in California

If you formed your LLC in another state — Delaware, Wyoming, Nevada, or anywhere else — but you do business in California, you are required to register as a foreign LLC with the California Secretary of State and pay the $800 annual minimum franchise tax. This is one of the most common misconceptions among entrepreneurs who form LLCs in 'tax-friendly' states.

The FTB's doing-business tests include organization or commercial domicile in California and inflation-adjusted thresholds for California sales, property, and payroll. Because those dollar thresholds change, use the FTB's current doing-business page rather than a copied annual figure.

A foreign LLC registers with the California Secretary of State using the current foreign-registration filing. A registered or California-doing-business LLC generally owes the $800 annual tax; the temporary first-year exemption ended after tax years beginning in 2023.

Can You Avoid the $800 Tax?

An LLC that is organized, registered, or doing business in California generally owes the $800 annual tax even without profit. Review current statutory exceptions and the FTB's short-form cancellation conditions before assuming the tax applies or does not apply.

The only way to permanently stop owing the $800 is to formally dissolve your California LLC (or withdraw your foreign LLC registration). To dissolve a domestic California LLC, you file a Certificate of Dissolution (Form LLC-3) and a Certificate of Cancellation (Form LLC-4/7) with the SOS, and file a final Form 568 with the FTB marked as a final return. Once the cancellation is effective, no further $800 taxes accrue.

Important timing note: if you dissolve your LLC after January 1 but before the April 15 tax due date, you may still owe the $800 for the full year in which you dissolved. The FTB generally considers the tax earned at the start of the taxable year. Dissolving on December 31 avoids owing for the next year; dissolving on January 5 still triggers that year's $800.

Some business owners consider converting to a sole proprietorship or S corporation to escape the LLC fee. However, S corporations owe California's franchise tax minimum of $800 as well (based on net income, with a minimum of $800). A sole proprietorship avoids the entity tax but provides no liability protection. Consult a California CPA or tax attorney before restructuring solely to minimize the franchise tax.

• No legal way to avoid the $800 while your LLC is active and doing California business
• Formal dissolution of the LLC is the only permanent solution
• Dissolving in December (not January) avoids triggering the next year's tax
• File Form LLC-3 (Dissolution) and Form LLC-4/7 (Cancellation) to stop accruing taxes
• File a final Form 568 with the FTB marked as a final return
• S corporations also owe California's $800 minimum — conversion does not help

Compare California to Low-Tax States

California's $800 annual tax stands in sharp contrast to states with no annual LLC tax. Here is how the most commonly compared states stack up:

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