Key figures
California accounting
2026, with sources
- Minimum franchise tax
- $800Not owed for the first taxable year of a newly incorporated or qualified corporation.
- IRC conformity date
- January 1, 2025Fixed date, moved from Jan 1, 2015 by SB 711 for tax years beginning on or after Jan 1, 2025.
- Section 174 (TCJA amortization)
- Does not conformCalifornia does not conform; research costs stay deductible under the state’s own rules.
A franchise tax with a floor
California’s corporate tax is a franchise tax on the privilege of doing business in the state, measured by net income: 8.84% for most corporations, reported on Form 100 to the Franchise Tax Board. Every corporation incorporated, registered or doing business in California owes at least $800 a year, the minimum franchise tax, except in the first taxable year after it newly incorporates or qualifies.
“Doing business” is broader than registering, and the FTB decides it, not the company. The FTB treats an out-of-state corporation as doing business if it actively engages in transactions for profit in California, or if its California sales, property or payroll pass an inflation-adjusted threshold. For 2025 that was $757,070 of sales, or $75,707 of property or payroll (or 25% of the total); the FTB indexes the figures each year and had not posted the 2026 amounts when this page was checked. One full-time engineer in California can cross the payroll line on their own.
Conformity, Section 174 and depreciation
California conforms to the Internal Revenue Code as of a fixed date, not on a rolling basis. SB 711, enacted October 1, 2025, moved that date from January 1, 2015 to January 1, 2025 for tax years beginning on or after January 1, 2025, with a long list of exceptions.
The exceptions that matter to a startup: California does not follow the TCJA change that requires Section 174 research and experimental costs to be capitalized and amortized, and it does not allow federal bonus depreciation. The state return therefore starts from federal income and backs these out on Schedule F, and the state tax provision carries its own deferred tax balances for fixed assets and research costs.
Apportionment and the combined report
Business income is apportioned by a single sales factor. Sales of services and intangibles, which covers SaaS, are assigned to California under market-based rules: to the extent the customer receives the benefit in the state. A SaaS company with Californian customers but no Californian staff can still owe California tax.
Members of a unitary group file one combined report, worldwide by default. A group can elect water’s-edge filing on Form 100W, which narrows the report mostly to US entities but is a multi-year commitment.
Deadlines
- 15th day of the 4th month after year end — Apr 15California Corporation Franchise or Income Tax Return; the tax is due the same dayForm 100
- 15th day of the 11th month after year end — Nov 15Automatic 7-month extension to file; it does not extend the time to payForm 100 (extended)
- 15th day of the 4th, 6th, 9th and 12th months of the tax yearEstimated tax: 30%, 40%, nothing, then 30% of the year’s liabilityForm 100-ES
The federal baseline
This page covers what California adds. The federal rules underneath it apply here too.
Common questions
Does a Delaware C-corp that just qualified in California owe the $800 minimum?
Not in its first taxable year, if it newly incorporated or qualified in California: the FTB exempts that year from the minimum tax. It still owes 8.84% on any California income that year. From the second year on, the $800 minimum is due even at a loss, and it is paid with the first Form 100-ES installment on the 15th day of the 4th month.
Does California make us amortize R&D under Section 174?
No. California’s conformity date moved to January 1, 2025 under SB 711, but the state did not adopt the TCJA rule that capitalizes research and experimental costs under Section 174, and it has long decoupled from federal bonus depreciation. Both create book-tax differences that are tracked separately for the state.
Can we use our NOLs against California income?
Only if California taxable income is $1 million or more. For tax years 2024 through 2026, companies at or above that line cannot deduct NOL carryovers; they keep computing them, and the carryover period is extended for each suspended year. The FTB’s list of 2026 legislation does not extend the suspension past 2026.
Accounting next door
- AZArizona accountingA 4.9% corporate income tax with a $50 minimum, on an Internal Revenue Code frozen at a fixed date the legislature moves each year — to January 1, 2026 as of June 2026.
- NVNevada accountingNevada has no corporate income tax. It taxes Nevada gross revenue above $4 million a year through the Commerce Tax, and payroll through the Modified Business Tax.
- OROregon accountingOregon taxes corporations twice: a 6.6%/7.6% excise tax on income with a sales-based minimum, and a 0.57% Corporate Activity Tax on Oregon receipts over $1 million.
Founder guides on this
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- US GAAPUS GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
- FundraisingAudit-ready books before your Series AInvestors, lenders and auditors ask for the same things: accrual statements, reconciled accounts and support for every balance. How to be ready first.
More of the California guide
- ReceivablesReceivables and sales tax in CaliforniaSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in CaliforniaPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in CaliforniaWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in CaliforniaRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in CaliforniaCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.