California taxes

California taxes personal income at 1% to 12.3%, with another 1% on taxable income over $1,000,000. A sole proprietor owes no separate business tax. Every LLC and corporation pays at least $800 a year, even in a year it lost money. An LLC also pays a fee on its California income once that reaches $250,000. C corporations pay 8.84% of their California income and S corporations 1.5%, with the $800 as the minimum.

Personal income tax

California residents file Form 540. Rates rise in steps from 1% to 12.3%, with separate steps for single, joint and head of household filers. Taxable income over $1,000,000 pays another 1%, the Behavioral Health Services Tax, and that threshold is the same on a joint return. It used to be called the Mental Health Services Tax.

The standard deduction is small: $5,706 single, $11,412 joint. Instead of exemptions, California takes credits off the tax: $153 for you and another for your spouse on a joint return, $153 more for each person who is blind or 65 or older, and $475 for each dependent. The credits shrink at higher incomes.

California does not tax Social Security, unemployment compensation, or California Lottery winnings. It does not follow the federal rules for health savings accounts, so a federal HSA deduction is added back.

Return

Form 540

Rates, single or married filing separately

1% up to $11,079, 2% above $11,079, 4% above $26,264, 6% above $41,452, 8% above $57,542, 9.3% above $72,724, 10.3% above $371,479, 11.3% above $445,771, 12.3% above $742,953

Rates, married filing jointly

1% up to $22,158, 2% above $22,158, 4% above $52,528, 6% above $82,904, 8% above $115,084, 9.3% above $145,448, 10.3% above $742,958, 11.3% above $891,542, 12.3% above $1,485,906

Rates, head of household

1% up to $22,173, 2% above $22,173, 4% above $52,530, 6% above $67,716, 8% above $83,805, 9.3% above $98,990, 10.3% above $505,208, 11.3% above $606,251, 12.3% above $1,010,417

Behavioral Health Services Tax

1% of taxable income over $1,000,000, for every filing status

Standard deduction

$5,706 single or married filing separately, $11,412 married filing jointly or head of household

Exemption credits

$153 for you and for your spouse, $153 more for each person blind or 65 and over, $475 per dependent

Credits shrink above

$252,203 single, $504,411 joint, $378,310 head of household, by $6 per credit for each $2,500

Not taxed

Social Security, unemployment compensation, California Lottery winnings

Sole proprietor

A sole proprietor with no LLC registers nothing with the Secretary of State, so California charges no $800 annual tax and no LLC fee, and there is no Form 568 to file.

Your business profit is taxed on your own Form 540, at the personal rates above. Forming an LLC would start the $800 a year.

Single-member LLC

A single-member LLC files Form 568 even though the IRS ignores it and its profit goes on your personal return. It pays the $800 annual tax on its own voucher, Form FTB 3522, by the 15th day of the 4th month of the tax year, which is April 15 for a calendar year. It is owed whether the LLC made money or not, and until the LLC is formally cancelled, even if it never traded.

On top of that is the LLC fee, based on total California income rather than profit: nothing under $250,000, $900 from $250,000, $2,500 from $500,000, $6,000 from $1,000,000, $11,790 from $5,000,000. It is estimated on Form FTB 3536 by June 15 for a calendar year, with the balance paid with the return. Underpaying the estimate adds a 10% penalty on the shortfall.

Return

Form 568

Annual tax

$800, on Form FTB 3522, due April 15 for a calendar year

LLC fee

nothing under $250,000, $900 from $250,000, $2,500 from $500,000, $6,000 from $1,000,000, $11,790 from $5,000,000, on total California income

LLC fee estimate

Form FTB 3536, due June 15 for a calendar year

Partnership

A California partnership files Form 568 or Form 565, the California return of income. Form 568 is the LLC version. The profit passes through to the partners, who report it on their own returns.

It pays the $800 annual tax for the privilege of doing business in California, whatever it earned. An LLC taxed as a partnership also pays the LLC fee on its California income, described under single-member LLCs above.

If any partner lives outside California, the partnership must withhold California tax on the California income it pays out to them.

S corporation

A California S corporation files Form 100S and pays 1.5% of its California income at the corporate level, with a minimum of $800. It pays the larger of the two, not both. The profit also passes through to the shareholders, who report it on their own returns.

If any shareholder lives outside California, the corporation must withhold California tax on the California income it pays out to them.

C corporation

A C corporation files Form 100 and pays 8.84% of its California income, with a minimum of $800. It pays the larger of the two, not both, so a corporation that lost money still pays $800. The minimum is due by the 15th day of the 4th month of the tax year, before the year's result is known.

A corporation selling into other states counts only its California share, measured by California sales over total sales.

Return

Form 100

Corporate tax

8.84% of California income

Minimum

$800, paid instead of the tax when the tax is smaller

Multi-state profit

California sales over total sales

Estimate your state tax

Pick your business type and enter this year's numbers to see the state business tax California charges. It assumes all your sales are in California.

An estimate for planning, not tax advice.

Sources

• California 2025 Personal Income Tax Booklet (Form 540)
• ftb.ca.gov 2025 Limited Liability Company Tax Booklet (Form 568)
• ftb.ca.gov FTB Pub. 3556 Limited Liability Company Filing Information
• ftb.ca.gov Publication 1017 Resident and Nonresident Withholding Guidelines (R&TC 18662)
• ftb.ca.gov Business tax rates
• ftb.ca.gov 2025 Instructions for Form 100 Corporation Tax Booklet
• ftb.ca.gov 2025 Instructions for Form 100S S Corporation Tax Booklet
• ftb.ca.gov 2025 Instructions for Schedule R (R&TC Section 25128.7)

Last reviewed August 2026.