California C-corp 8.84% tax, worked
$100,000 of California-apportioned net income → $8,840. $5,000 → the $800 floor. A loss → still $800. That's the core rule; the details are in what counts as Californian income, when the money is due, and the first-year exception.
The rule
A C-corporation doing business in California pays the greater of 8.84% of its California net income or the $800 minimum franchise tax. The same 8.84% applies to Delaware and other out-of-state corporations registered or doing business here: the rate follows the income, not the state of incorporation. Banks and financial corporations pay a higher rate (10.84%).
“California net income” is federal taxable income adjusted for California differences, multiplied by your California apportionment percentage: for most companies, California sales divided by total sales. See the apportionment guide.
| California net income | 8.84% computes to | Tax owed |
| Loss | $0 | $800 |
| $5,000 | $442 | $800 |
| $9,050 | $800 | $800 (breakeven) |
| $100,000 | $8,840 | $8,840 |
| $250,000 | $22,100 | $22,100 |
The first-year exception
A corporation newly incorporated or qualified in California is exempt from the $800 minimum for its first taxable year. It is not exempt from the 8.84% tax on income it actually earns that year. Founders who read the first-year rule as “no California tax in year one” underpay by exactly 8.84% of their profit. The LLC first-year waiver under AB 85 was a separate rule that expired after 2023.
When it's paid
California corporations prepay through estimated payments on the 30/40/0/30 schedule (April 15, June 15, September 15, and December 15 for calendar years) with the first installment at least $800. The return, Form 100, is due April 15 (15th day of the 4th month). An automatic extension lets you file as late as November 15 (the 15th day of the 11th month) without a request, but not to pay: any unpaid tax is due April 15, with Form 3539 or Web Pay.
Worked example: Delaware SaaS company
A Delaware C-corp has $2,000,000 of total sales, $500,000 to California customers, and $400,000 of federal taxable income with no California adjustments. Apportionment: $500,000 ÷ $2,000,000 = 25%. California net income: $100,000. Tax: $8,840, prepaid as $2,652 in April, $3,536 in June, and $2,652 in December. The same company with a $50,000 loss owes the $800 minimum.
C-corp or S-corp?
An eligible corporation that elects S status pays 1.5% instead of 8.84% at the entity level, with owners taxed personally on the profit. See the S-corp election guide. Venture-backed companies usually can't elect (preferred stock and institutional investors disqualify them) and accept 8.84% once they become profitable. Compute your own figure in the California calculator.