California · CA
Self-employment taxes in California
Federal self-employment tax is the same in every state. What changes is what California charges on top — and whether that changes the answer our S-Corp breakeven calculator gives you.
Does electing S-Corp still pay in California?
Not always — and this is the single most expensive thing to get wrong about self-employment in California. The state charges an S-Corp 1.5% of net income, with a minimum of $800 a year whether the business profits or not. A sole proprietor who never incorporates pays none of it.
Below $53,334 of net income the $800 minimum is what you pay; above it, the 1.5% takes over and keeps growing. Either way it comes off the federal saving before you see any of it.
Worked for a single filer paying themselves half of profit as salary, with typical payroll and tax-preparation costs. The federal column is what the calculator gives you; the California column is what the state takes back.
| Profit | Federal saving | CA entity tax | Net saving |
|---|---|---|---|
| $60,000 | $1,868 | −$800 | $1,068 |
| $90,000 | $2,547 | −$800 | $1,747 |
| $120,000 | $3,660 | −$900 | $2,760 |
| $180,000 | $5,496 | −$1,350 | $4,146 |
Assumes an unincorporated sole proprietorship today, so the whole entity tax is a new cost. If you already run an LLC paying $810 a year, subtract what you already pay, and read the LLC fee section below — electing removes that fee, which pushes the other way. Your own salary, costs and filing status change these figures — this is the shape of the answer, not your answer.
The first year is cheaper than the rest
California waives the $800 minimum for a newly formed S corporation filing its initial return for its first taxable year. The 1.5% still applies to first-year net income, so year one costs 1.5% of profit rather than the greater of that and $800.
What electing also unlocks
The comparison above treats electing purely as a cost. It is not the whole picture, because California also offers a pass-through entity elective tax at 9.30% — a way for the business to pay state tax at entity level, deduct it federally, and pass the owner a credit for their share. It exists to work around the federal cap on deducting state and local tax.
Only an entity taxed as a partnership or an S corporation may elect. A sole proprietor cannot elect, and neither can a disregarded single-member LLC — it can only ever be a qualified taxpayer receiving a credit, never the entity making the election.
So this is not another number to subtract — it is a door that electing opens and staying a sole proprietor leaves shut. For a high earner whose federal deduction is capped, it can be worth more than the 1.5% tax costs. Whether it is worth anything at all depends on your federal position, which this page does not model.
Elected annually on Form FTB 3804 with a timely filed original return. The first payment is due by 15 June of the election year and must be the greater of $1,000 or half of the prior year's PTE tax. For 2026 through 2030, missing that payment no longer voids the election, but each owner's credit is cut by 12.5% of their share of the shortfall. The owner's credit is non-refundable and carries forward up to five years.
Scheduled to remain available through tax year 2030.
The corporation pays estimated tax too
Easy to miss, because it is not the same schedule as your personal one. Once elected, the entity files its own estimated payments on Form 100-ES. Four payments, due the 15th day of the 4th, 6th, 9th and 12th months after the start of the tax year — for a calendar-year business, 15 April, 15 June, 15 September and 15 December.
Read that against the personal schedule below and the mismatch is the point: you can end up running two different estimated-tax calendars in the same year, and nothing prompts you about the second one.
Income tax
California has graduated brackets for tax year 2025, topping out at 12.30% on taxable income above $742,953 for a single filer. Self-employment profit is ordinary income to the state. The full schedule is in the source below — this page does not compute your state bill, for the reason given at the end.
What an LLC costs to keep alive
Registering an LLC in California costs $70 once. Keeping it registered costs more, every year, profit or no profit:
- Minimum franchise tax: $800 a year — Payable whether or not the business makes a profit. The first-year exemption applied only to 2021–2023 and has expired.
- Statement of Information (Form LLC-12): $20 every two years
- Annualised: $810 a year, taking biennial charges as half their amount per year.
An LLC is a legal structure, not a tax structure: on its own it changes nothing about the self-employment tax you pay. It is worth having for liability reasons, and it is worth knowing it has a running cost before you decide it is free.
The fee charged on turnover, not profit
California charges an additional LLC fee based on total California annual income (Form 568, Side 1, line 1) — turnover, not profit. It is a flat amount per band, not a percentage, so one dollar over a threshold costs the whole step:
| Income from | Fee |
|---|---|
| $250,000 | $900 |
| $500,000 | $2,500 |
| $1,000,000 | $6,000 |
| $5,000,000 | $11,790 |
Because it tracks income rather than earnings, a business with high turnover and thin margins pays it out of a much smaller profit. A freelancer billing $260,000 who keeps a third of it still owes the full $900.
And it cuts the other way on the S-Corp question. An LLC taxed as a corporation is excepted from the return this fee is reported on, so electing removes the fee entirely. Above $250,000 of income that is a saving of at least $900 a year set against the entity tax in the table above — which is why a high-revenue LLC can find electing cheaper in California, the opposite of the usual advice. The figures above assume an unincorporated sole proprietorship, which never paid this fee, so they do not include that saving.
State estimated payments
California wants its own estimated tax payments, separate from your federal ones. Paying the IRS does not satisfy the state, and the state’s due dates are not always the federal ones.
California does not use four equal instalments. The schedule is 30% by 15 April, 40% by 15 June, nothing in September, and 30% by 15 January.
Our quarterly estimated tax planner works out the federal payments only. Add the state figures to them rather than assuming they are included.
Where these figures come from
Every figure on this page is taken from California’s own publications — its revenue department for taxes, its Secretary of State for filing fees — and never from a summary of them. Each is shown with the date a human last checked it against the source.
- FTB, 2025 California Tax Rate Schedules (Personal Income Tax Booklet) — checked Schedule X, single or married/RDP filing separately — top band is $742,953 and over at 12.30%
- FTB, S corporations — checked 1.5% on California source income; $800 annual minimum franchise tax, due the first quarter of each accounting period; first-year net income is still subject to the 1.5%
- FTB, S corporations — checked "We waive the minimum tax on newly formed or qualified S corporations filing an initial return for their first taxable year" and "Any first-year net income is still subject to the 1.5% tax rate"
- FTB, Due dates for businesses — checked Corporations and exempt organizations — Form 100-ES; 1st through 4th quarter payments due the 15th day of the 4th, 6th, 9th and 12th months after the beginning of the tax year
- California Secretary of State, Business Entities Fee Schedule — checked Page 2 — Articles of Organization (Form LLC-1) $70.00; Statement of Information (Form LLC-12) $20.00. Fee schedule revision 06/2018; the $800 franchise tax figure is from ftb.ca.gov
- California Revenue and Taxation Code §17942, limited liability company fee — checked §17942(a): "every limited liability company subject to tax under Section 17941 shall pay annually to this state a fee equal to" $900 at $250,000 of total California income, $2,500 at $500,000, $6,000 at $1,000,000 and $11,790 at $5,000,000. §17941(d) defines a limited liability company as an organization "that is not taxable as a corporation for California tax purposes", which is why electing corporate treatment removes the fee. Mirrored in the 2025 Form 568 instructions at General Information F and its "Exceptions to Filing Form 568" list.
- FTB, Pass-through entity (PTE) elective tax — checked "The PTE elective tax is 9.3% of the qualified entity's qualified net income"; "A qualifying PTE is an entity taxed as a partnership or S corporation"; available for taxable years beginning on or after 1 January 2021 and before 1 January 2031; Payment 1 due on or before 15 June of the taxable year of election
- FTB, Estimated tax payments — checked Payment schedule: 30% (15 Apr 2026), 40% (15 Jun 2026), 0% (15 Sep 2026), 30% (15 Jan 2027)
What this page does not tell you
- Your California income tax bill. That needs state-specific deductions, credits and additions this site does not model. A half-computed state tax that looks authoritative is worse than none, so the page states the rates and cites the schedule instead of producing a number.
- City and county taxes. Some cities levy their own business tax or licence fee on top of the state.
- Apportionment. If you earned in more than one state, which state taxes which dollar is its own question, and not one this page answers.
The method behind all of it is on the methodology page. These are planning estimates, not tax advice — see the disclaimer. If a figure here is wrong, tell us and it gets corrected and logged.