California LLC franchise tax first year: yes, it is back for new LLCs
If you formed a California LLC recently, the simple answer is this: the first-year $800 annual tax is back. California gave new LLCs a temporary first-year exemption for tax years beginning on or after January 1, 2021 and before January 1, 2024. That exemption has expired. The Franchise Tax Board now says every LLC that is doing business in California or organized in California must pay the $800 annual tax, and the first payment is due by the 15th day of the 4th month after filing with the Secretary of State.
The short answer
For a new California LLC, assume the first-year franchise tax is due unless you clearly fit one of the stated exceptions. The main number is still $800. The main deadline is still the 15th day of the 4th month after the LLC files with the Secretary of State.
That matters because older articles still talk about the temporary waiver as if it never ended. It did end. If you are forming now, you should budget for the tax.
| California first-year tax item | Rule |
|---|---|
| Standard annual tax | $800 |
| Who owes it | LLCs doing business in California or organized in California |
| First payment deadline | 15th day of the 4th month after filing with the Secretary of State |
| Temporary first-year exemption | Only for tax years beginning on or after Jan. 1, 2021 and before Jan. 1, 2024 |
| Possible first-year exception still relevant now | Short-form cancellation within one year, if eligible |
| Possible extra LLC fee | Applies when California income is more than $250,000 |
Why people get confused
California changed the rule for a few years. FTB Pub. 3556 says Assembly Bill 85 created a first-year exemption from the $800 annual tax for LLCs that organized or registered with the Secretary of State on or after January 1, 2021 and before January 1, 2024. That was real, but it was temporary.
The current FTB LLC page still explains that temporary exception in a section called "Exceptions to the first year annual tax." Read carefully and the date range is the whole story. If your first tax year does not fall inside that window, the exemption does not help you.
California says every LLC that is doing business or organized in the state must pay an annual tax of $800, and the first-year waiver only applied for tax years beginning on or after January 1, 2021 and before January 1, 2024.
When the first $800 payment is due
The Franchise Tax Board says you have until the 15th day of the 4th month from the date you file with the Secretary of State to pay your first-year annual tax. That is the part many founders miss. They expect an annual tax to show up next year. California does not wait that long.
So if your LLC is approved in one month, you count forward to the 4th month and pay by the 15th day of that month. After that, subsequent annual tax payments stay due on the 15th day of the 4th month of the taxable year.
The $800 tax is not always the only California number
Some LLCs also owe the separate California LLC fee when California income is more than $250,000. The FTB page lists fee tiers starting at $900 and says the estimated fee is due by the 15th day of the 6th month of the current tax year.
That does not mean every new LLC owes more than $800. It means the $800 annual tax and the LLC fee are two different things. A lot of owners mix them together and end up unclear on what they are budgeting for.
The short-form cancellation exception
There is still one first-year exception worth noticing. The FTB says if you cancel your LLC within one year of organizing and qualify to file California's short-form cancellation, the LLC will not be subject to the annual $800 tax for its first tax year.
This is not a general way to avoid the tax while keeping the business alive. It is a narrow cleanup rule for LLCs that are being shut down quickly and meet the state's cancellation conditions.
What new founders should do in practice
Budget for the $800 right away. Do not treat it like a problem for next year. Add the payment deadline to your calendar when the LLC is approved, not when tax season starts. If the LLC may have more than $250,000 in California income, look at the separate LLC fee schedule too.
Also remember that the California Secretary of State filing work and the Franchise Tax Board work are separate lanes. Forming the LLC with the state does not complete the tax side for you.
Bottom line
The first-year California LLC franchise tax exemption was temporary and no longer covers newly formed LLCs. For a current California LLC, plan on the $800 annual tax in the first year, due by the 15th day of the 4th month after filing. The only narrow first-year relief that still matters for many readers is the short-form cancellation exception if the LLC is shut down quickly and qualifies. If you are forming in California now, the honest budget is not just the formation filing fee. It includes the first-year $800 tax too.