California LLC annual tax and LLC fee: Form 3522, Form 3536 and Form 568 (tax year 2026)

Figures are for tax year 2026 unless a line says otherwise. A short section near the end covers 2025 returns, including those filed on extension in autumn 2026. Researched on 25 September 2026 from the California Revenue and Taxation Code (R&TC) on leginfo.legislature.ca.gov and from Franchise Tax Board (FTB) pages and form instructions.

Scope and who it is for (FTB: Limited liability company)

This Guide covers the two entity-level charges that California imposes on an LLC classified as a partnership or as a disregarded entity:

• the annual LLC tax under R&TC §17941 ($800, paid with form FTB 3522); and
• the LLC fee under R&TC §17942 (tiered by California total income, estimated with form FTB 3536).

Both are reported on Form 568. It is for preparers and owners working out who owes, how much, and by when, and how to stop the charges by cancelling.

It does not cover forming or registering an LLC, the Statement of Information, or entity choice. Those are in the separate California formation Guide. It also does not cover members' personal income tax, nonresident withholding, or the pass-through entity elective tax.

An LLC that is taxed as a corporation does not pay either charge. It files as a corporation under the Corporation Tax Law (R&TC §18633.5(h)). California and federal classification must be the same.

Ask the client first

• Is the LLC organized in California, registered with the Secretary of State (SOS) as a foreign LLC, or neither? Get the exact SOS filing or registration date.
• How is it classified (disregarded, partnership, or corporation)? For a disregarded LLC, who is the owner (individual, C corporation, S corporation, partnership) and what is the owner's tax year?
• Which taxable year is in question: 2025 or 2026, calendar or fiscal?
• If it is neither organized nor registered in California: what are its California sales, property and payroll, and total sales, property and payroll? Does it actively engage in any transaction in California? Does it hold interests in partnerships or S corporations with California activity?
• What was its total income, including cost of goods sold, and how much of that is assigned to California customers?
• What LLC fee was owed for the preceding taxable year, and what was paid on forms 3522 and 3536, and on which dates?
• Has it stopped doing business? Has it filed a final Form 568, or a certificate of cancellation (or dissolution) with the SOS, and on which dates?
• Is it a series LLC, or one of several LLCs with the same owners?
• Is the sole owner a member of the US Armed Forces who has been deployed?

The method, step by step

1. Classify. Confirm the LLC is disregarded or a partnership. If it is taxed as a corporation, stop here and use the corporation rules.
2. Test who owes. Apply the three triggers below: organized in California, registered with the SOS, or doing business in California under §23101. Any one is enough.
3. Check the exceptions. Look at the 15-day short year (§17946), the first-year rules (§17941(g)), the deployed-military exemption (§17941(f)), and short-form cancellation.
4. Annual tax. Fix the amount ($800, or $400 for a qualifying first year from 2027) and the due date: the 15th day of the 4th month of the taxable year. Pay with form 3522 (R&TC §17941).
5. LLC fee. Build California total income as gross income plus cost of goods sold, assigned to California under the sales rules, excluding amounts from lower-tier LLCs already subject to the fee. Read the fee from the table.
6. Estimate. Pay the estimated fee with form 3536 by the 15th day of the 6th month. Compare the payment with the prior-year fee to test the 10% penalty (R&TC §17942(d)).
7. Return. File Form 568 by the due date for the LLC's classification and owner. Pay any fee balance by the original due date. An extension extends only the time to file.
8. Stopping. If the business has ended, file the final Form 568 and the SOS cancellation within the time limits below.

Who owes the tax and fee (R&TC §17941)

An LLC owes the annual tax for a taxable year if any of these is true:

• Organized in California. The SOS has accepted its articles of organization (§17941(b)(1)).
• Registered in California. The SOS has issued it a certificate of registration as a foreign LLC (§17941(b)(1)). Registration alone is enough, even with no California business.
• Doing business in California, as defined in §23101 (§17941(a)). This applies even if the LLC never registered.

An organized or registered LLC owes the tax "for each taxable year, or part thereof, until a certificate of cancellation of registration or of articles of organization is filed" with the SOS (§17941(b)(1)). It is owed whether or not the LLC is active or profitable. Every LLC that owes the annual tax also owes the LLC fee if its California total income reaches the first band (§17942(a)).

A foreign LLC that is not registered and not doing business in California, but has California-source income, files Form 565 (if it is a partnership) instead of Form 568, and does not owe these charges. A single-member, nonregistered, disregarded foreign LLC in that position need not file Form 565 or Form 568 (FTB LLC page; 2025 Form 568 booklet).

Doing business: the §23101 tests (R&TC §23101)

An LLC is doing business in California for a taxable year if any one of these is met:

• (a) Active conduct. It actively engages in any transaction for financial or pecuniary gain or profit.
• (b)(1) Organized or commercially domiciled in California.
• (b)(2) Sales. California sales exceed the lesser of the indexed sales amount or 25% of total sales. Sales by an agent or independent contractor count. Sales are assigned under §25135 and §25136, so services go to where the customer receives the benefit.
• (b)(3) Property. California real and tangible personal property exceeds the lesser of the indexed property amount or 25% of total property.
• (b)(4) Payroll. California compensation exceeds the lesser of the indexed payroll amount or 25% of total compensation.
• Pass-through shares count. The LLC's pro rata or distributive share of the sales, property and payroll of partnerships and S corporations is included (§23101(d)).

"Exceed" means more than. An amount exactly equal to the lesser figure does not meet that test.

Indexed amounts, by year (FTB: Doing business in California). The statute's base amounts are $500,000 (sales) and $50,000 (property, and payroll). The FTB must revise them every year (§23101(c)), so the base amounts are not the current thresholds.

Year	Sales exceed	Property exceeds	Payroll exceeds
2025	$757,070	$75,707	$75,707
2026	Not yet published on the FTB page at 25 September 2026	Not yet published	Not yet published

For a 2026 answer that turns on the dollar amount, open the FTB page and use the 2026 row once it appears. Until then, say that the 2026 amount is unpublished and show the 2025 figure labelled as 2025. Where the 25% prong is lower than the statutory base amount, the answer does not depend on the indexed amount.

Public Law 86-272 protects only against taxes based on net income. The FTB says a business it protects "still may be considered to be doing business in California and may be liable for filing and paying the applicable amounts". It does not remove the annual tax or the LLC fee.

Thresholds and figures, tax year 2026

Annual LLC tax (R&TC §17941)

• Amount. The tax equals the minimum franchise tax in §23153(d), which is $800 (R&TC §23153). There is no proration for a short year. It is owed in full even when the LLC fee is nil. The two charges are added together.
• Due date. On or before the 15th day of the 4th month of the taxable year (§17941(c)). For a calendar-year LLC in its second and later years, that is 15 April. For 2026, form FTB 3522 is the voucher for the $800 annual tax for taxable year 2026 (2026 FTB 3522 instructions).
• First year. The FTB counts from the SOS filing date: "You have until the 15th day of the 4th month from the date you file with the SOS to pay your first-year annual tax." Its example: an LLC registered on 18 June has its first tax due on 15 September (FTB LLC page). So the month of filing counts as month 1.
• Disregarded LLC. Its taxable year is the owner's taxable year (R&TC §18633.5).
• Foreign LLC that starts later. If the 15th day of the 4th month of an existing foreign LLC's year has already passed when it starts business in California or registers, pay the annual tax immediately (2026 FTB 3522 instructions).

First-year rules (R&TC §17941(g))

When the LLC's first taxable year began (see the foreign LLC rule below)	First-year annual tax	Source
On or after 1 January 2021 and before 1 January 2024	Exempt from the annual tax for its first taxable year	§17941(g)(1)
In 2024, 2025 or 2026	Full $800. No waiver applies	§17941(g)(1) ended
First taxable year beginning on or after 1 January 2027 and before 1 January 2030	$400 instead of $800, for the first taxable year only	§17941(g)(2), added by SB 180

SB 180 (Stats. 2026, ch. 85) was approved on 13 July 2026 and took effect immediately (SB 180 bill text). Under it, "every limited liability company required to file a return under Section 18633.5 shall, instead of the amount specified in Section 23153, pay the annual tax to this state in the amount of four hundred dollars ($400) for its first taxable year." Points to hold on to:

• The test is the year in which the first taxable year begins. An LLC whose first taxable year begins on 16 December 2026 pays $800 for 2026 and $800 for 2027.
• Foreign LLCs. The first taxable year of a California LLC begins when it files its articles with the SOS. For a foreign LLC doing business in California, it begins when the LLC was organized in its home state, not when it registers or starts business in California (2026 FTB 3522 instructions). So a Delaware LLC organized in 2022 that registers in California in 2027 pays $800 for 2027, not $400. Only a foreign LLC organized in 2027 to 2029 can reach the $400 rate.
• The $400 is for the first taxable year only. The second and later years are $800.
• It does not change the LLC fee.
• The FTB had not published 2027 forms or guidance on the $400 rate at the research date. Check the 2027 form 3522 instructions before paying.

LLC fee (R&TC §17942)

California total income for the taxable year	Fee
Less than $250,000	No fee
$250,000 or more, but less than $500,000	$900
$500,000 or more, but less than $1,000,000	$2,500
$1,000,000 or more, but less than $5,000,000	$6,000
$5,000,000 or more	$11,790

• Flat amounts. Each band is a fixed amount, not a percentage. Income of exactly $250,000 is in the $900 band. Income of exactly $500,000 is in the $2,500 band. The FTB applies the table to California total income "rounded to the nearest whole dollar" (FTB LLC page).
• The base. "Total income from all sources derived from or attributable to this state" means gross income, as defined in R&TC §24271, plus cost of goods sold paid or incurred in the trade or business (§17942(b)(1)(A)). Cost of goods sold is not subtracted, and neither are operating expenses. For a reseller, the base is therefore close to gross sales, not gross profit.
• Lower-tier LLCs. The base excludes allocations, attributions of income or gain, and distributions the LLC receives as a member of, or holder of an economic interest in, another LLC, if they are attributable to income already subject to the LLC fee (§17942(b)(1)(A)).
• Assigning to California. Use the sales-assignment rules of §25135 (tangible goods: delivered to a California buyer) and §25136 (services and intangibles: where the benefit is received or the intangible is used), as modified by regulations under §25137, "other than those provisions that exclude receipts from the sales factor" (§17942(b)(1)(B)). On Form 568, Schedule IW computes the figure (2025 Form 568 booklet).
• Commonly controlled LLCs. If the same persons own more than 50% of several LLCs or partnerships doing business in California, and the FTB decides they were formed mainly to reduce the fee, the FTB may measure the fee on their combined total income. The FTB may make that determination for only one LLC in a commonly controlled group, but each LLC in the group is jointly and severally liable for the fee (§17942(b)(2)).
• Due. The fee is due on the date the return is required to be filed under §18633.5, which is the original due date (§17942(c)). An extension does not move it.

Estimated fee and the 10% penalty (R&TC §17942(d))

• Estimate. Estimate and pay the fee by the 15th day of the 6th month of the current taxable year (§17942(d)(1)). For a calendar-year LLC that is 15 June 2026. Use form FTB 3536. If no fee is owed, do not file form 3536 (2026 FTB 3536 instructions).
• Short first year. If the taxable year ends before the 15th day of its 6th month, no estimated payment is due. The fee is then due with the return (2026 FTB 3536 instructions).
• Penalty. A penalty of 10% of the underpayment is added to the fee. The underpayment is the fee for the year minus the amount paid by the 15th day of the 6th month (§17942(d)(2)).
• Safe harbor. There is no penalty if the amount paid by that date is equal to or greater than the LLC's total fee for the preceding taxable year (§17942(d)(2)). A new LLC has no preceding year, so it has no safe harbor and must estimate.
• Balance. Any fee not paid as an estimate is still due by the original return due date, with form 3536, or form 3537 if filing on extension (2025 Form 568 booklet).

Other penalties (2025 Form 568 booklet)

• Late payment (§19132). This starts at 5% and rises by 0.5% for each month or part of a month unpaid, up to 25%. For the annual tax it runs from the 15th day of the 4th month. For the unpaid fee it runs from the original return due date.
• Late filing (§19131). This is 5% of the unpaid tax, which includes the LLC fee, for each month or part of a month, up to 25%. If the return is filed after the extended date, the penalty runs from the original due date. Late-filing and late-payment penalties together may not exceed 25% of the unpaid tax.
• Per-member penalty (§19172). This applies to an LLC classified as a partnership that files late or files an incomplete return: $18 times the number of members, for each month or part of a month, up to 12 months. It is charged on top of the other penalties, unless the failure is due to reasonable cause (R&TC §19172).
• Unregistered foreign LLC or suspended domestic LLC (§19135). $2,000 per taxable year is charged when a foreign LLC that has not registered (or whose powers, rights and privileges are forfeited), or a domestic LLC that has been suspended, is doing business in California and fails to file a return within 60 days after the FTB sends a notice and demand, unless it has reasonable cause (R&TC §19135). It is charged in addition to other penalties.
• Interest runs on unpaid amounts. Use the FTB's current rate. This Guide does not quote one.

Boundary and exception table (R&TC §17946)

Situation	Rule	Result
Taxable year of 15 days or less and no business in California in that period	§17946	Not subject to the annual tax or fee for that year, and no Form 568 is required for it. For a calendar-year LLC, that means filing with the SOS on 17 December or later.
Filed with the SOS on 16 December (a 16-day year)	§17946 not met	$800 for that year, due by the 15th day of the 4th month counting from December (15 March)
Any business done in the short year	§17946 not met	Full tax for that short year
Domestic LLC cancels with form LLC-4/8 (short form cancellation) within 12 months of filing its articles, with no business done, no debts other than tax, assets distributed, a majority vote of managers or members to dissolve, the final return filed or to be filed, and any investor payments returned	FTB LLC page; 2025 Form 568 booklet	Not subject to the annual tax for its first taxable year
Sole owner a deployed member of the US Armed Forces; LLC California total income $250,000 or less; LLC operates at a loss or ceases operation in the year	§17941(f), for taxable years beginning before 1 January 2030	No annual tax for that year. Enter zero on Form 568 lines 2 and 3
Series LLC meeting the home-state segregation conditions	2025 Form 568 booklet	Each series is a separate LLC: its own Form 568, annual tax and fee if registered or doing business in California
LLC taxed as a corporation	§17941(d); §18633.5(h)	Not within §17941 or §17942. Files as a corporation
California sales exactly equal to the lesser §23101 amount	"exceed"	Sales test not met. Check the other tests

Whether a short year that is exempt under §17946, falling just before 2027, makes 2027 the "first taxable year" for the $400 rate is not settled. §17946 exempts the short year but does not say it is not a taxable year. Contrast §23114, which says so expressly for corporations. Do not rely on $400 in that case without FTB guidance. Ask the FTB, or pay $800 and claim the difference once guidance appears.

Worked cases (R&TC §17942)

Case A: consulting SMLLC, ordinary (2026) (R&TC §17942)

• Facts. A California disregarded LLC, formed in 2024, owned by an individual with a calendar year. In 2026 it earns $310,000 of consulting fees, all from California clients. It has no cost of goods sold. Its 2025 California total income was below $250,000, so its 2025 fee was nil.
• Annual tax. $800, due 15 April 2026 with form 3522.
• Fee. California total income is $310,000, which falls in the $250,000 to $500,000 band, so the fee is $900.
• Estimate. The prior-year fee was nil, so any payment by 15 June 2026, including none, avoids the 10% penalty. The $900 is still due by 15 April 2027, the original due date of the return.
• Total entity-level charge for 2026: $800 + $900 = $1,700.

Case B: reseller, cost of goods sold added back (boundary) (R&TC §17942)

• Facts. An LLC classified as a partnership sells goods delivered only to California buyers. 2026 gross sales are $1,200,000 and cost of goods sold is $900,000, so gross income is $300,000.
• Base. Gross income $300,000 plus cost of goods sold $900,000 gives $1,200,000.
• Fee. $1,200,000 is in the $1,000,000 to $5,000,000 band, so the fee is $6,000, not the $900 that gross profit alone would suggest.

Case C: underpaid estimate (penalty) (R&TC §17942(d))

• Facts. The 2025 fee was $2,500. The 2026 fee turns out to be $6,000. By 15 June 2026 the LLC paid $1,000 on form 3536.
• Test. $1,000 is less than the $2,500 prior-year fee, so the safe harbor fails.
• Penalty. The underpayment is $6,000 − $1,000 = $5,000. The penalty is 10% × $5,000 = $500.
• Had it paid $2,500 by 15 June, there would be no penalty. The $3,500 balance would then be due by the original due date of the return.

Case D: year-end formation, 2026 into 2027 (boundary) (R&TC §17941)

• 16 December 2026. Articles filed on 16 December 2026 give a 16-day 2026 year. §17946 does not apply, so $800 is due for 2026 by 15 March 2027. 2027 is the second taxable year, so another $800 is due by 15 April 2027. The $400 rate is not available.
• 4 January 2027. Articles filed on 4 January 2027 give a first taxable year beginning in 2027. The first-year tax is $400 under §17941(g)(2), due by 15 April 2027 (4th month, counting January). 2028 is $800.
• 17 December 2026, no business until January. The 2026 year is exempt under §17946. Whether 2027 is charged $400 or $800 is the unsettled point above.

Case E: out-of-state LLC under the sales test (exclusion) (R&TC §23101)

• Facts. A Nevada LLC, not registered in California, with no California property or payroll and no other California activity. 2025 total sales are $3,000,000, of which $600,000 is assigned to California customers.
• Sales test for 2025. 25% of total sales is $750,000. That is less than the 2025 indexed amount of $757,070, so the lesser figure is $750,000. $600,000 does not exceed it.
• Result. It is not doing business under §23101(b) on these facts, and it owes no annual tax or fee for 2025. If it registers with the SOS, it owes the $800 from then on, whatever its sales.

When to refuse or refer

• Nexus is disputed. This includes a small or passive interest in a California LLC or partnership, agents or staff in California, or a Public Law 86-272 position. Refer to a California multistate specialist.
• Back years unfiled. For an LLC that was doing business without filing, refer the voluntary disclosure, back returns, penalty abatement and revivor to a specialist.
• Combined or commonly controlled groups, unitary reporting, or a proposed FTB aggregation under §17942(b)(2).
• Mid-year conversion, merger or dissolution, where two returns or a short final year are needed.
• Members' own tax: nonresident withholding, nonconsenting nonresident members' tax, and the pass-through entity elective tax. These use other rules.
• First-year $400 after an exempt 15-day year. Unsettled, as above (R&TC §17941(g)).
• Limited liability partnerships and limited partnerships. Different sections apply.

Filing and payment steps with deadlines (2025 Form 568 booklet)

Step	Form	Due
Annual tax	FTB 3522	15th day of the 4th month of the taxable year (15 April 2026 for calendar 2026). First year: 15th day of the 4th month counting from the SOS filing date
Estimated LLC fee	FTB 3536	15th day of the 6th month of the taxable year (15 June 2026 for calendar 2026)
Return: LLC classified as a partnership	Form 568	15th day of the 3rd month after the year ends
Return: disregarded LLC owned by a pass-through entity (S corporation, partnership, or LLC classified as a partnership)	Form 568	15th day of the 3rd month after the year ends
Return: any other disregarded LLC (for example, owned by an individual)	Form 568	15th day of the 4th month after the owner's year ends
Fee balance, and any unpaid tax	FTB 3536, or FTB 3537 if on extension	Original due date of the return

• Weekends and holidays. When a due date falls on a weekend or holiday, it moves to the next business day.
• Extensions. No application is needed. An LLC in good standing that is classified as a partnership gets an automatic seven-month extension to file. A disregarded LLC gets six months, except one owned by a partnership or an LLC classified as a partnership, which gets seven months. Suspended or forfeited LLCs get none. An extension does not extend the time to pay (R&TC §18567).
• Disregarded LLC return content. Complete Form 568 Side 1, Side 2, Side 3 and Side 7 (Schedule IW), and pay the tax and any fee. Schedules B and K are also required if either test is met: Schedule B income or loss (line 1 or lines 3 to 11) is $3,000,000 or more; or Schedule K line 21a (total distributive income/payment items) is $3,000,000 or more, or minus $3,000,000 or less. Schedule T is required if a nonresident owner has not signed the consent.
• Paying. Pay by Web Pay, electronic funds withdrawal, card, or by mail with the voucher. Do not send the annual tax with Form 568; use form 3522.

Stopping the tax: cancellation (FTB LLC page)

• FTB. File the final Form 568 with the Final Return box checked, and stop doing business in California after the final taxable year.
• SOS. File the certificate of cancellation (form LLC-4/7). A domestic LLC also files a certificate of dissolution (form LLC-3). Filing a "final" return alone does not stop the tax. The FTB will notify the LLC that the annual tax continues until the SOS filing is made (§17941(b)(2)).
• No tax for the following year only if all of these are met (2025 Form 568 booklet):
  • the final return for the preceding year is filed on time, including any extension;
  • the LLC does no business in California after the final taxable year; and
  • the SOS cancellation is filed within 12 months of that timely final return.
• If cancellation is filed after the year end, "a subsequent year return and an additional $800 tax may be required."
• Short form cancellation (form LLC-4/8) is for a domestic LLC within 12 months of filing its articles. It must have done no business, have no debts other than tax, have distributed its known assets, have a majority vote of managers or members to dissolve, have filed (or be about to file) its final return, and have returned any investor payments. It avoids the first-year annual tax.

2025 returns, including those filed on extension in autumn 2026 (FTB: Doing business in California)

• The annual tax ($800), the fee bands and the 10% estimate penalty were the same for 2025 as for 2026. The 2025 annual tax was due 15 April 2025 (calendar year), and the 2025 estimated fee 15 June 2025.
• The 2025 doing-business amounts are $757,070 (sales), $75,707 (property) and $75,707 (payroll).
• An LLC formed in 2024 or 2025 had no first-year waiver.
• For a calendar-year 2025 return, the extension runs six or seven months from the original due date, as above. For a partnership-classified LLC and for an individual-owned disregarded LLC, that is generally 15 October 2026. Any fee or tax paid with an extended return is late: the late-payment penalty and interest run from the original due date.

Completion checklist (R&TC §17942)

• Classification confirmed as disregarded or partnership. A corporation-classified LLC is excluded.
• Trigger recorded: organized, registered, or doing business under §23101, with each test run against the lesser of the 25% prong and that year's indexed amount
• 15-day rule, first-year rule (none for 2024 to 2026; $400 for first years beginning 2027 to 2029), deployed-military exemption and short-form cancellation checked
• Annual tax date computed. In the first year, count the SOS filing month as month 1.
• California total income built as gross income plus cost of goods sold, assigned under §25135 and §25136, with qualifying lower-tier LLC amounts excluded
• Fee read from the band table, with no interpolation
• Form 3536 payment compared with the prior-year fee; any 10% penalty computed on the fee minus the timely estimate
• Form 568 due date matched to classification and owner; fee balance paid by the original due date
• If closing: final return, SOS cancellation within 12 months, and no business afterwards