Key Takeaways
California LLC owners must pay the $800 annual franchise tax, which applies to all LLCs as of 2024 and continues through 2026. To maintain compliance and plan finances effectively, understanding new due dates, filing requirements, and strategic considerations is essential. Below are the key points to help you manage these updates with confidence.
- End of AB 85 waiver: All California LLCs formed on or after January 1, 2024, are required to pay the $800 annual franchise tax without exception. LLCs formed before December 31, 2023, had a waiver through 2023. All LLCs now owe the $800 annual fee.
- Defined payment deadlines: The first $800 franchise tax payment for new LLCs is due by the 15th day of the fourth month after formation (e.g., September 15 for a June 1 formation). Subsequent payments are due annually on April 15.
- Timing strategies to manage payments: Forming your LLC later in the year can help you avoid consecutive $800 tax payments, improving cash flow and easing tax obligations.
- Obligation to file Form 3536: LLCs projecting California-sourced revenue exceeding $250,000 must file Form 3536 to estimate and pay the additional LLC fee, which starts at $900 and increases with income.
- Mandatory franchise tax payments: The $800 annual fee is required for all LLCs, with no current exemptions following AB 85’s expiration.
- Access to expert assistance: For questions, contact the California Franchise Tax Board (FTB) directly at 800-852-5711 or utilize their online chat and waitlist options to receive accurate guidance tailored to your situation.
Grasping these points and aligning your LLC’s formation and payment schedules will streamline your tax management. The following sections provide deeper insight into filing procedures, strategic planning, and compliance advice to keep your California LLC in good standing after AB 85’s conclusion.
Introduction
California LLC owners must pay the $800 annual franchise tax — a mandatory fee that applies to all LLCs regardless of income or activity. Understanding due dates, filing rules, and timing strategies is essential for 2026. Whether you have recently formed your LLC or are considering doing so, understanding the updated due dates, filing responsibilities, and strategic options is critical to avoid unexpected penalties and make the most of your tax planning.
This article explains the changes following AB 85’s expiration, outlines your filing duties—especially regarding Form 3536—and offers practical strategies to manage your LLC’s franchise taxes. Staying well-informed will help keep your business compliant while maintaining financial flexibility as California restores its standard LLC taxation rules.
Understanding AB 85 and Its Expiration Impact on California LLCs
Assembly Bill 85 was introduced during the COVID-19 pandemic to ease the financial burden on businesses by temporarily waiving the $800 annual franchise tax for California LLCs from 2021 through 2023. This relief helped newly formed and existing LLCs by lowering their initial cost of doing business during economic uncertainty.
However, with the expiration of AB 85 on January 1, 2024, this waiver no longer applies. All California LLCs must once again pay the $800 franchise tax annually, regardless of income or business activity level, reinstating the previous tax structure.
It is crucial for LLC owners to recognize that the tax relief period has ended, requiring renewed attention to payment deadlines, estimated fees, and filing requirements set by the Franchise Tax Board (FTB).
The $800 Annual Franchise Tax: Due Dates and Payment Obligations
Following AB 85’s expiration, the $800 annual franchise tax is mandatory for LLCs starting from the 2024 tax year onward. The timing of these payments depends on the LLC’s formation date and taxable year-end, with the tax due annually irrespective of profitability or active business operations.
For LLCs formed before January 1, 2024, the $800 franchise tax payment is due by April 15 each year. For example, an LLC that was established prior to 2024 must submit its payment by April 15, 2024.
Conversely, LLCs formed on or after January 1, 2024 are required to pay their first $800 tax installment by the 15th day of the fourth month following formation. For instance, an LLC formed on June 1, 2026, would have their first payment due by September 15, 2026.
This structure provides new LLCs with a brief grace period after formation before the initial franchise tax payment is required, followed by annual payments aligned with the business’s taxable year.
Filing Requirements: Form 3536 and Estimated LLC Fee Obligations
Alongside the reinstated franchise tax, many LLCs may also need to file Form 3536 to report and pay an estimated LLC fee based on their California-sourced gross income. This additional fee applies when an LLC’s revenue surpasses established thresholds, starting at $250,000.
The estimated LLC fee calculated on Form 3536 is separate from the $800 franchise tax and grows progressively with higher income brackets. LLCs anticipating California-sourced revenue over the $250,000 threshold must file this form to avoid underpayment penalties.
Filing deadlines for Form 3536 align with franchise tax payments, ensuring streamlined compliance. Failure to file or underestimating revenue can lead to interest charges and penalties from the state.
LLC owners should evaluate their expected income carefully each year to determine if Form 3536 filing is required.
Strategies to Avoid Back-to-Back California LLC Tax Payments
One common financial challenge after AB 85’s expiration is avoiding two $800 franchise tax payments within a short time frame. This “back-to-back” payment scenario happens when the first-year tax payment and the next year’s April 15 payment fall too close together, increasing the immediate tax burden for new LLC owners.
A practical method to mitigate this is to plan your LLC formation date strategically. For example, forming your LLC in the last quarter of the year—such as October or November—delays the first franchise tax payment into the following calendar year, spacing the payments further apart.
For instance, an LLC formed on November 15, 2025, would owe the first $800 payment by February 15, 2026, pushing the next tax payment to April 15, 2027, thus avoiding two payments in quick succession.
This strategy applies only to new formations and cannot be implemented retroactively for existing LLCs. LLC owners should weigh formation timing carefully to optimize cash flow and meet their business goals.
Key Actions for California LLCs After AB 85 Expiration
To comply with the reinstated franchise tax requirements, LLC owners should first verify their formation date and taxable year to determine accurate payment deadlines. It is equally important to file all required documents on time, including Form 3536 if your LLC’s expected income exceeds the threshold.
If your LLC made payments during the waiver period or formed around the transition in early 2024, ensure your records clearly reflect the waiver’s expiration to prevent confusion and possible notices from the Franchise Tax Board.
Maintaining up-to-date documentation and monitoring payment schedules can reduce the risk of late fees or penalties. Planning ahead also allows you to utilize available strategies such as formation timing to better manage tax obligations.
How to Contact the California Franchise Tax Board for Assistance
Navigating California’s tax system can be complex. The Franchise Tax Board offers multiple contact options to support LLC owners with questions about the franchise tax, Form 3536, and related filing requirements.
Here are the primary ways to reach the FTB:
- Phone: Call 800-852-5711 (within the U.S.) Monday through Friday, 8 a.m. to 5 p.m. PST for direct assistance.
- Email: Use the secure messaging center on the FTB’s official website to submit account-specific inquiries and receive detailed responses.
- Online Portal: Access resources including payment options, downloadable forms, FAQs, and e-filing services via the FTB website.
To expedite help, have your LLC’s identification number, formation date, and relevant tax year details ready when contacting the FTB.
Summary of Critical Deadlines and Requirements
To recap, California LLC owners should keep in mind the following essential points:
- The $800 annual franchise tax resumed on January 1, 2024, following the expiration of AB 85’s waiver.
- New LLCs formed in 2024 must pay the first $800 tax by the 15th day of the fourth month after formation; existing LLCs pay annually on April 15.
- LLCs with California-sourced revenue exceeding $250,000 must file Form 3536 to pay estimated fees on a sliding scale.
- Planning LLC formation timing can help avoid consecutive franchise tax payments, benefiting new LLCs.
- Consistent record-keeping, adherence to deadlines, and contacting the California Franchise Tax Board when needed are vital for ongoing compliance.
With the previous waiver period concluded, proactive management and timely action are key to effectively navigating California’s reinstated LLC franchise tax system.
Conclusion
As AB 85’s temporary waiver ends, California LLC owners must now manage the reinstated $800 annual franchise tax and associated filing obligations with renewed attention. Understanding payment deadlines for both existing and newly formed LLCs, combined with strategic choices like timing your business formation, can help reduce overlapping tax expenses. Compliance with Form 3536 remains essential for LLCs crossing revenue thresholds, ensuring accurate reporting and fee payment.
By maintaining thorough records and utilizing the resources offered by the California Franchise Tax Board, LLC owners can confidently fulfill their tax responsibilities, minimize penalties, and maintain healthy cash flow. Looking ahead, those who anticipate regulatory shifts and adapt their tax planning proactively will be best positioned to sustain their ventures amid ongoing economic changes. The question for California LLCs is not whether to comply—but how to leverage sound tax management to support growth and resilience in a post-waiver era.