California LLCs: AB 85 now expired (and $800 fee due the 1st year) (2024)

A California LLC must now pay the $800 Annual Franchise Tax (1st year)

Now, every California LLC must pay the $800 Annual Franchise Tax every year. The first year’s payment is due on the 15th day of the 4th month after the LLC was created. And every year’s payment after that is due on April 15th.

There used to be a law (AB85) that waived the first year’s payment for California LLCs. But it has expired, effective 12/31/2023.

California LLCs formed before December 31 2023:

AB85 still applies to your LLC! You don’t have to pay the $800 Franchise Tax by March 2024.

However, you will have to pay the Annual Franchise Tax every year from 2025 onward.

California LLCs formed after January 1, 2024:

AB85 doesn’t apply to you, and you have to pay the Franchise Tax as usual.

Meaning, there is no more waiver (it’s $800 per year), and the California LLC Annual Franchise Tax is due in the 4th month after your LLC is formed.

For example, if your LLC was approved on June 1, 2024:

• Your first $800 Annual Franchise Tax is due by September 15, 2024. This pays for the 2024 tax year.
• Your next $800 Annual Franchise Tax is due by April 15, 2025. This pays for the 2025 tax year.
• And then it must be filed every year (by April 15) after that.

Is there any way to avoid paying the Annual Franchise Tax?

No, there isn’t. Every California LLC has to pay the $800 Annual Franchise Tax.

If you see any websites talking about the AB85 exemption, don’t be fooled. The AB85 exemption expired in 2023.

The best we can do is offer you a way to avoid paying the Annual Franchise Tax back-to-back. If you form your LLC later in the year, you might end up paying the Annual Franchise Tax “back-to-back” because it’s due a few months after formation and then again in April.

Check out How to Avoid Back-to-back California LLC Tax Payments to learn more about this method.

Note: This method only works if you haven’t formed a California LLC yet. If you already have a California LLC, it won’t work.

Does my California LLC need to file Form 3536 (Estimated Fee for LLCs) in the 1st year?

Yes, your California LLC needs to file Form 3536 and pay an Estimated Fee if it will make more than $250,000 in total projected revenue.

If your LLC will not earn that much in total projected revenue, then you don’t need to file Form 3536 (in the LLC’s 1st year or any year.)

What is the Estimated Fee for California LLCs?

It’s called an “Estimated” Fee because you will need to forecast your LLC’s total revenue. If your LLC will come close (or exceed) $250,000 in total revenue, then you should file Form 3536 and pay the Estimated Fee.

The Estimated Fee begins at $900 and increases depending on your LLC’s estimated income. For more information and instructions, please see California LLC Annual Franchise Tax.

California Franchise Tax Board Contact Info

If you have any questions, you can contact the California Franchise Tax Board (FTB) at 800-852-5711.

Their hours are Monday through Friday from 8am to 5pm, Pacific Time.

• While hold times can sometimes be long, the FTB has an option to hold your place in line and call you back.
• You can check how long the wait times are: CA FTB: wait times.
• There is also a live chat option: CA FTB: live chat.