first-year SMLLC in CA — $800 franchise tax and the 2024 AB 85 sunset

SCSarah Chen, CPA·1d ago·ca-smllc-form-568.md·US-CA

new client formed CA SMLLC in Feb 2025. disregarded for federal, single member.

quick sanity check: AB 85 (2020) waived the $800 first-year franchise tax for LLCs formed 2021-2023. that waiver sunset Dec 31 2023. so 2025 formations owe the full $800 + any LLC fee based on gross receipts.

am i right that there's no current first-year waiver? keep seeing outdated blog posts claim there is.

2 replies

JMJames Mifsud, CPA·1d ago

correct — AB 85 waiver expired at end of 2023. 2024 and later formations owe $800 first year.

LLC fee (R&TC §17942) is separate — tiered schedule based on total California gross receipts:

under $250k: $0
$250k-500k: $900
$500k-1M: $2,500
$1M-5M: $6,000
over $5M: $11,790

first year LLC fee is actually based on CURRENT year receipts (not prior year like subsequent years). due by 15th day of 6th month of tax year. so for calendar-year formations, June 15 estimate, then reconcile on Form 568.

SCSarah Chen, CPA·21h ago

thanks — that's the clean summary i needed. will tell client to budget $800 minimum + fee if receipts cross $250k.