California Taxes: Tax Obligations of an LLC and a Corporation
California is the largest economy among the US states and a global centre for technology and innovation. Its distinctive tax system calls for caution, however, as the tax authority (the Franchise Tax Board – FTB) applies strict rules.
| 2025 | Federal | State | C-Corp | LLC | Sales | |
| C-Corp | 21% | California | 8.84% | 13.30% | 7.25% | |
| Dividend | 20% (0%, 15%) | Delaware | 8.70% | 6.60% | 0.00% | |
| C-Corp + Dividend | 36.8% (32,85%, 21%) | Florida | 5.50% | 0.00% | 6.00% | |
| LLC $0-15,000 | 0% | New York | 7.25% | 10.90% | 4.00% | |
| LLC $0-11,925 | 10% | Nevada | 0.00% | 0.00% | 6.85% | |
| LLC $11,925-48,475 | 12% | Wyoming | 0.00% | 0.00% | 4.00% | |
| LLC $48,475-103,350 | 22% | Texas | 0.00% | 0.00% | 6.25% | |
| LLC $103,350-197,300 | 24% | Colorado | 4.40% | 4.40% | 2.90% | |
| LLC $197,300-250,525 | 32% | Tennessee | 6.50% | 0.00% | 7.00% | |
| LLC $250,525-626,350 | 35% | Washington | 0.00% | 9.00% | 6.50% | |
| LLC $626,350+ | 37% | Arizona | 4.90% | 2.50% | 5.60% | |
| Illinois | 9.50% | 4.95% | 6.25% | |||
| Massachusetts | 8.00% | 9.00% | 6.25% |
California’s Minimum Franchise Tax
Every LLC registered or doing business in California must pay a minimum annual tax of **USD 800** (Franchise Tax) directly to the Franchise Tax Board (FTB), regardless of whether it reports a profit or a loss. Certain temporary first-year exemptions exist for newly formed LLCs, but the tax becomes a standing obligation in subsequent years.
With higher income, a California LLC also pays a graduated fee (LLC Fee) ranging from **USD 900 to USD 11,790**, depending on the total gross income attributable to California.
How Is a California C Corporation Taxed?
C-Corporations are subject to California state corporate income tax at a rate of **8.84%**. As with LLCs, the minimum Franchise Tax of USD 800 per year must also be paid.
Sales Tax in California
California’s basic state Sales Tax is **7.25%**, the highest state rate in the USA. Once local and county surcharges are included, the total Sales Tax in many areas ranges from **7.25% to 10.75%**.
Form 5472 and International Obligations
Foreign members of a California Single-Member LLC must file federal Form 5472 with the IRS every year, or face penalties starting at USD 25,000.
Conclusion
California offers enormous market potential but brings a heavy tax burden, including a fixed minimum tax of USD 800 for both LLCs and C-Corporations.
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