Self-employed taxes and LLC costs in California, 2026
California is where the yearly cost of simply owning an LLC is highest, and where the S election comes with a state tax of its own.
Total tax on this income in 2026
$20,785
Put aside 24% of each payment · $5,196 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| California income tax | $2,985 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 24.5% |
With an S corp election and a $34,000 salary, about $2,866 less tax (check it).
Computed by Radif Partners from IRS and California agency documents read on October 15, 2026 · How we calculate
A California LLC pays $70 to file its articles, $20 for the Statement of Information every two years, and an annual LLC tax of $800 to the Franchise Tax Board for every year it exists, with or without income. That puts five years of ownership at $4,120. From $250,000 of California gross receipts a second LLC fee is added. The owner's profit is taxed at rates from 1 % to 12.3 %: on $75,000 of profit, a single filer owes about $2,241 to California and $17,736 in all. An S corporation replaces the $800 with a franchise tax of 1.5 % of net income, $800 at least. At $120,000 of profit and a $50,000 salary that entity tax is about $958, and the election still saves roughly $4,681 a year.
California at a glance, 2026
| LLC filing fee | $70 |
| Statement of Information (Form LLC-12) | $20 every two years |
| Annual LLC tax (FTB 3522) | $800 a year |
| Income tax | 1 % to 12.3 % |
| S corporation election | followed by the state |
| Tax on $75,000 of profit (single) | $17,736 in all, $2,241 to California |
The $800 is not a fee for filing anything. It is a tax for the privilege of being an LLC registered or doing business in California, owed on Form FTB 3522 by the 15th day of the fourth month of each tax year until the company is cancelled (FTB, limited liability companies). The first-year exemption that applied from 2021 to 2023 has expired, so a company formed in December owes the full amount for that short year too. Gross receipts change the bill only at $250,000: from there a separate LLC fee of $900 applies, rising in steps to $11,790 at $5 million or more, with an estimate due by the 15th day of the sixth month on Form FTB 3536.
S corp or LLC in this state
S corp saves
$4,615
| Salary used (42%) | $50,400 |
| California entity tax | $952 |
When the S corporation tax replaces the $800
An LLC that elects S status stops paying the LLC tax and pays the S corporation franchise tax instead: 1.5 % of California net income, with $800 as a floor (FTB, S corporations). A newly formed or newly qualified S corporation is excused from the minimum in its first taxable year, though the percentage still applies to that year's income. At $120,000 of profit and a $50,000 salary, the corporation's own California tax is about $958, which the LLC vs S corp calculator subtracts from the payroll saving before it shows the result.
Payroll costs more here than in most states. A new employer pays 3.4 % unemployment insurance on the first $7,000 of wages, plus the 0.1% employment training tax, and employees, the owner included, have State Disability Insurance of 1.3% withheld on all wages in 2026 (EDD, rates and withholding). A sole proprietor is outside SDI unless they buy elective coverage.
The pass-through entity tax, renewed to 2030
California extended its elective PTE tax to taxable years from 2026 through 2030 at 9.3% of qualified net income. The entity pays the tax and the owners claim it back as a credit on their own returns. For 2026 to 2030, missing the June 15 prepayment no longer voids the election; the owners' credit is reduced by 12.5% of the unpaid amount instead (FTB, PTE elective tax).
A lopsided estimated tax calendar
California splits a year's estimated tax 30% in April, 40% in June, nothing in September and 30% in January, so the June check is the biggest one (FTB, estimated tax payments). Taxpayers with $1,000,000 or more of AGI must base payments on the current year's tax. Above $1,000,000 of taxable income, the 1% Mental Health Services Tax lifts the top rate further.
San Francisco
San Francisco's gross receipts tax spares businesses at or below $5 million of city receipts; voters rejected raising that exemption to $7.5 million on June 2, 2026 (SF election results). Every business still pays the city's registration fee. The local business tax guide covers how city levies sit beside state tax.
California income tax brackets
| Taxable income, single | Rate | Taxable income, joint | Rate |
|---|---|---|---|
| $0 to $11,456 | 1 % | $0 to $22,912 | 1 % |
| $11,456 to $27,157 | 2 % | $22,912 to $54,314 | 2 % |
| $27,157 to $42,861 | 4 % | $54,314 to $85,722 | 4 % |
| $42,861 to $59,498 | 6 % | $85,722 to $118,996 | 6 % |
| $59,498 to $75,197 | 8 % | $118,996 to $150,394 | 8 % |
| $75,197 to $384,109 | 9.3 % | $150,394 to $768,218 | 9.3 % |
| $384,109 to $460,927 | 10.3 % | $768,218 to $921,854 | 10.3 % |
| $460,927 to $768,213 | 11.3 % | $921,854 to $1,536,426 | 11.3 % |
| over $768,213 | 12.3 % | over $1,536,426 | 12.3 % |
City and county taxes on business income in California
| Place | Tax | Rate | Who pays |
|---|---|---|---|
| San Francisco | Gross Receipts Tax (and Overpaid Executive Tax) | varies | Small business exemption: $5 million of San Francisco gross receipts, starting with tax year 2025 filing (due 2026); businesses at or below it do not file the GRT return. June 2, 2026 Measure C (raise to $7.5 million) failed 34.02% yes / 65.98% no. |