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Editorial 8 MIN READ

California in 2025: the $800 floor and everything that sits on top of it

What LLCs and corporations actually owe Sacramento this year, and the compliance rules arriving behind the tax bill

The Editors
Staff, Incorporator.org
8 min read Updated
Contents 8 sections
  1. The $800 floor, as it stands in 2025
  2. What you actually file: LLC-12 and SI-200
  3. The PTE election, still worth taking
  4. Sales-tax nexus after Wayfair, and where California actually draws it
  5. Privacy compliance: CCPA and CPRA for anyone big enough
  6. The climate disclosure rule on the runway
  7. What California actually costs, set against the usual alternative
  8. Sources

alifornia's annual report is not really an annual report. It is a $800 franchise-tax floor with a $20 or $25 filing paperclipped to it, and in 2025 it applies to more of your clients than it did last year.

The first-year waiver that softened formations from 2021 through 2023 is gone. The PTE election is still live. The climate-disclosure statute is closer, not yet billing. Here is what a California entity actually owes this calendar year, and what it has to file to stay in good standing.

The $800 floor, as it stands in 2025

Every LLC registered or doing business in California owes an $800 annual tax under Cal. R&TC § 17941. That is a floor, not a rate. It is flat. It does not care whether the LLC had revenue, had a bank account, or existed only on paper for the year. If the entity was on the rolls for any part of the taxable year, the $800 is due.

The first-year waiver that California enacted through AB 85 in 2020, which exempted LLCs, LPs, and LLPs formed between January 1, 2021 and December 31, 2023 from the $800 in their first taxable year, has expired. Entities formed in 2024 and later pay the tax from year one. For a California LLC formed on December 15, 2024, the first $800 payment was due by April 15, 2025, and the second $800 is due April 15, 2026. A founder who read a 2023 blog post and assumed the waiver still applied will be surprised in August when the notice arrives.

Corporations owe a parallel $800 minimum franchise tax under Cal. R&TC § 23153. The substantive corporate income-tax rate is 8.84% under Cal. R&TC § 23151, and the corporation pays the greater of the computed tax or the $800 minimum. For banks and financial corporations the rate runs higher; for everyone else, 8.84% on California-apportioned income with the floor underneath.

LLCs that elect corporate treatment federally still owe the $800 minimum on the California side, plus the corporate tax on apportioned income. The $800 is a feature of being registered here, not of any particular federal classification.

What you actually file: LLC-12 and SI-200

The document most people mean when they say "annual report" is the Statement of Information. There are two flavors, and they are not on the same cadence.

LLCs file Form LLC-12 every two years, during the six-month window ending on the last day of the anniversary month of formation or registration. The fee is $20. You can file online through the Secretary of State's bizfile portal, by mail, or in person in Sacramento. The form asks for the LLC's current address, the names and addresses of managers or members with management authority, the agent for service of process, and a brief statement of the principal business activity. Miss the deadline and the Franchise Tax Board assesses a $250 penalty under Cal. R&TC § 19141, in addition to the Secretary of State suspending the entity's powers if the filing slips long enough.

Corporations file Form SI-550 (stock) or SI-100 (nonprofit) every year, within 90 days of registration and annually thereafter in the anniversary month. The fee is $25. The historical designation SI-200, still the common shorthand for the corporate Statement of Information, covers the same form family. The penalty structure mirrors the LLC side: $250 from the Franchise Tax Board, and loss of good standing if the filing stays delinquent.

The two filings, the Statement and the $800, are administered by different agencies. The Secretary of State collects the Statement fee. The Franchise Tax Board collects the $800. An entity can be current with one and delinquent with the other, and routinely is. Reconcile them separately.

The PTE election, still worth taking

California's pass-through entity elective tax, codified at Cal. R&TC § 19900 and following and enacted through AB 150 in 2021, remains available for tax year 2025. The mechanic: a qualifying pass-through (most S-corps and multi-member LLCs taxed as partnerships, with some excluded entity types) pays a 9.3% entity-level tax on consenting owners' distributive share of qualified net income. The owner then claims a nonrefundable California credit for the tax paid on their behalf, and the entity deducts the tax federally as a state-and-local payment that is not subject to the $10,000 SALT cap at the individual level.

The election is annual and has two payment deadlines that matter. For tax year 2025, the first prepayment is due by June 15, 2025, and must be the greater of $1,000 or 50% of the prior year's PTE tax. Miss that deadline by even a day and the election for the year is lost. The balance is due by the entity's original return deadline in 2026.

For a profitable California S-corp with out-of-state owners or owners whose SALT deduction is already maxed, the PTE election is generally still in the money. Run the math before the June 15 date. There is no retroactive cure.

Sales-tax nexus after Wayfair, and where California actually draws it

California adopted the economic-nexus standard that South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018), made constitutional, and set the threshold at $500,000 in California-sourced sales in the current or prior calendar year under Cal. R&TC § 6203. There is no transaction-count prong (California dropped the 200-transactions alternative some other states use). An out-of-state seller that crosses $500,000 in California sales registers with the California Department of Tax and Fee Administration, collects district and state sales tax, and remits on the standard schedule.

Economic nexus for sales tax is independent of the $800 franchise tax. You can have one without the other. A remote seller that crosses the sales-tax threshold but has no payroll, property, or in-state business activity may still avoid franchise-tax nexus. A California-registered LLC with no California sales owes the $800 regardless.

Privacy compliance: CCPA and CPRA for anyone big enough

The California Consumer Privacy Act, as amended by the California Privacy Rights Act (CPRA) effective 2023, applies to any for-profit business that does business in California and meets one of three thresholds: annual gross revenue above roughly $25 million, or buying/selling/sharing personal information of 100,000 or more California residents or households, or deriving 50% or more of annual revenue from selling or sharing personal information. The 50,000-household threshold that existed in the original 2018 statute was raised to 100,000 by the CPRA amendments, so a 2025 compliance review that still uses the 50,000 number is working from stale text.

Practically, a California-registered LLC doing business in the state will trip the revenue threshold before it trips the records threshold. For a venture-backed company crossing into the eight-figure revenue range in 2025, privacy compliance moves from optional to budget line. The California Privacy Protection Agency is the enforcing body and has been issuing enforcement actions since 2024.

The climate disclosure rule on the runway

California enacted the Climate Corporate Data Accountability Act as SB 253 in 2023. It requires U.S. companies with annual revenues above $1 billion that do business in California to publicly report Scope 1, 2, and 3 greenhouse-gas emissions using TCFD-style methodology, with reporting beginning in 2026 for tax year 2026 emissions (Scope 1 and 2 in the first year, Scope 3 following).

For 2025, the rule is not yet billing. The California Air Resources Board is still finalizing implementing regulations, with a statutory deadline of July 1, 2025 for the rulemaking. Companies in scope are building data-collection systems in 2025 for first reports in 2026. If your revenue is above the $1 billion line and you have any California nexus, the back-office work starts this year even though the first filing does not.

A companion statute, SB 261, requires climate-related financial-risk reports from companies with revenues above $500 million on a biennial cadence starting January 1, 2026. The reports are narrative rather than emissions-quantified, but the scoping question (do we have to file?) is the same.

What California actually costs, set against the usual alternative

Running the arithmetic for a first-year California LLC with no revenue: $70 filing fee for the Articles of Organization, $20 for the initial Statement of Information (due within 90 days of formation), $800 for the franchise tax, plus a registered-agent fee if you use one and whatever your accountant charges to prepare Form 568. That is roughly $1,620 before you sell a dollar's worth of anything.

The comparable Delaware number is $90 to form, $300 for the annual LLC tax, and no state income tax on a non-operating entity. A California operating business cannot move to Delaware to avoid this; foreign-qualified entities that do business in California pay the $800 all the same under Cal. R&TC § 17941(a)(2). The Delaware premium that made sense for a holding vehicle in 2016 is orthogonal to California's operating-entity floor.

The only version of the "can I skip California?" question that has a clean answer is this: if your business has no California employees, no California office, no California inventory, and no California customers above the sales-tax threshold, you can probably avoid the $800. If you have any of those, you cannot, and the right move is to stop treating the $800 as an optimization problem and price it into the operating budget.

The 2025 compliance year in California is not unusually different from 2024. The first-year waiver going away is the largest single change for founders, and it only bites entities formed in 2024 and after. The privacy and climate rules are tightening on a multi-year arc. For most California entities the operational answer is boring and correct: pay the $800, file the Statement when the anniversary month comes up, and keep the PTE election math in the spreadsheet that gets revisited in May.

Sources

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