CA · Tax year 2026 · Last reviewed 2026-08-24
LLC vs S Corp in California: Tax Savings Calculator.
Compare federal payroll taxes, self-employment taxes, California ’s $800 annual fee and estimated S Corp savings in seconds.
At $100,000 net profit with a $50,000 W-2 salary, the federal payroll tax delta is $10,305. Adjusted for California's recurring cost, the estimated net modeled benefit (yr 1) is$8,305.
LLC Filing Fee
$70
one-time, California Secretary of State
Minimum Annual Franchise Tax (LLC)
$800
statutory minimum — other CA fees not modeled
S-Corp Recurring Cost
$1,500
$700 above the LLC rate
Estimated Net Modeled Benefit (yr 1)
$8,305
federal delta minus the annual fee
01 · California model
Tune the inputs. Numbers update live.
What does this mean? Your expected business profit for the year after business expenses but before the owner's salary.
The IRS requires "reasonable compensation" for S-Corp shareholder-employees. The salary is capped at your current net profit.
This is an illustrative assumption, not a tax or an IRS-required amount. Real overhead depends on your payroll provider, your CPA, and your state.
Per IRS Form 8959, these are added to your business income to determine whether the 0.9% Additional Medicare Tax applies.
Sets the Form 8959 threshold: $200K (single / HOH), $250K (MFJ), $125K (MFS).
California LLC recurring fee (deducted from savings)
$800
CA minimum $800/yr; other CA fees not modeled.
Defaults: $100K profit · $50K salary
URL updates as you type — copy it to share.
LLC
Federal payroll tax
$14,130
S-CORP
Federal payroll tax
$3,825
Federal Payroll / SE Tax Difference
$10,305
LLC SE tax minus the S-Corp's employer-side FICA on the owner salary. This is the federal payroll-tax piece only.
Estimated Net Modeled Benefit (yr 1)
$8,305
- Federal payroll-tax delta
- $10,305
- − California annual fee
- $9,505
- − Modeled S-Corp admin overhead
- $1,200
- = Estimated net modeled benefit
- $8,305
- − Approx. §199A W-2 drag
- $0
- = Net after QBI drag
- $8,305
Federal delta = the LLC's self-employment tax minus the S-Corp's employer-side payroll tax. The S-Corp employer-side figure ishalf of the standard 12.4% + 2.9% FICA on the salary; the 0.9% Additional Medicare Tax is entirely employee-side (no employer match) and is not included in the S-Corp employer-side comparison. The $70 filing fee is not included — it's a one-time setup cost. Income tax, QBI, health insurance, and retirement contributions are not modeled.
Estimate. Methodology & scope
ESTIMATE. The figures above estimate the federal payroll / self-employment tax difference between a Single-Member LLC (Schedule C / Schedule SE) and an S-Corp election, plus California's $800 LLC minimum franchise tax (LLC) and the 1.5%-of-net-income S-Corp franchise tax with an $800 minimum (S-Corp) and the one-time $70 California LLC filing fee (setup cost, not deducted from the year-1 net benefit). They do not include federal or California individual income tax (the state-income-tax flag is informational; the dollar amount is not modeled), the §199A QBI deduction (made permanent under the One Big Beautiful Bill Act, H.R. 1 / Public Law 119-21, signed July 4, 2025, with a 2026 phase-in range of $200K–$275K single / $400K–$550K MFJ), self-employed health insurance, retirement contributions, the half-of-SE-tax Schedule 1 adjustment, filing-status-specific deductions or credits, multi-state apportionment, reasonable-compensation enforcement, or other items that depend on your complete tax situation. The S-Corp administration overhead is a configurable illustrative assumption (defaulted to $1,200/yr), not a tax and not an IRS-required amount. Verify with a licensed CPA, EA, or tax attorney before acting.
02 · Why California specifically
The state-level numbers that move the answer.
An S-Corp election only pencils out when the federal payroll tax saved outpaces the recurring cost of running a corporate entity. Californiacharges $800per year to keep your entity in good standing and assesses ordinary state income tax on top of the federal figure.
At the calculator's default $100K / $50K inputs, the federal delta ($10,305) is what an LLC owner gives up in self-employment tax on net profit. After the California annual fee, the estimated net modeled benefit is$8,305.
State-specific note: California imposes an $800 minimum annual franchise tax on EVERY LLC (RTC § 17941) AND, in addition, a tiered LLC fee under RTC § 17942 keyed to CA-source income: $0 below $250K, +$900 at $250K–$499,999, +$2,500 at $500K–$999,999, +$6,000 at $1M–$4,999,999, +$11,790 at ≥$5M. The total is $800 + surcharge (e.g., $1,700 at $300K CA-source income, $12,590 at $5M+). Net profit is used as a conservative proxy for CA-source income; actual surcharge depends on CA allocation factor, which this calculator does not compute. The $20 LLC Statement of Information is NOT modeled.
Localized formula — how this number was calculated
// California — same engine as the homepage
seBase = netProfit × 0.9235
ssPortion = min(seBase, 184_500) × 0.124
medicare = seBase × 0.029
addlMed = max(0, seBase + existingWages − 200_000) × 0.009
llcTax = ssPortion + medicare + addlMed
// S-Corp — employer-side payroll tax only
ssPortion = min(salary, 184_500) × 0.124
medicare = salary × 0.029
standard = ssPortion + medicare
addlMed = max(0, salary + existingWages − 200_000) × 0.009
// employee-side only — no employer match
scorpTax = standard / 2 // 50% of standard FICA — AddlMed excluded
// Net benefit
payrollDelta = llcTax − scorpTax
netOfFee = max(0, payrollDelta − 800)
savings = max(0, netOfFee − 1200) // $1,200 admin overhead- LLC filing: one-time $70 to form the entity in California.
- Minimum annual franchise tax: $800/yr (statutory minimum; other CA fees not modeled).
- State income tax: applies on top of federal ordinary rates; not modeled.
03 · FAQ
LLC vs S Corp in California — frequently asked questions
Common questions about choosing between an LLC and S Corp in California, sourced from Google, Reddit, and Quora. The right answer depends on your income, reasonable compensation, and other factors — talk to a CPA for personal advice.
How much does it cost to form an LLC in California?
California charges a $70 filing fee to form an LLC, but the real cost is the $800 minimum annual franchise tax that applies every year — even if your business earns zero income. LLCs with gross receipts over $250K also pay a tiered fee ($900–$11,790) on top of the $800 minimum.
Does California have a state income tax?
Yes. California has the highest state income tax rates in the country, ranging from 1% to 13.3%. Both LLC pass-through income and S-Corp shareholder income are subject to California individual income tax. S-Corps also pay a separate 1.5% franchise tax on net income.
Is an S Corp election worth it in California?
It depends on your profit level. The $800 minimum franchise tax applies to both LLCs and S-Corps. S-Corps avoid the LLC gross receipts fee (which starts at $900 for revenue over $250K) but pay a 1.5% franchise tax on net income. At $100K net profit, the S-Corp election saves roughly $5,500–$6,000 in federal payroll tax but the California 1.5% tax on net income offsets some of that. The election typically becomes worthwhile once net profit exceeds $80K–$100K in California.
What is California's LLC gross receipts fee?
California charges a tiered LLC fee based on gross receipts (not net profit): $0 below $250K, $900 at $250K–$499K, $2,500 at $500K–$999K, $6,000 at $1M–$4.9M, and $11,790 at $5M+. This fee applies in addition to the $800 minimum franchise tax.
What is California's S-Corp franchise tax?
California S-Corps pay a 1.5% tax on net income (Form 100S), with an $800 minimum. For a single-owner S-Corp at $100K net profit, this works out to $1,500/yr. The $800 minimum applies only when net income is below approximately $53,333.
Can a California LLC elect S Corp status?
Yes. A California LLC can file IRS Form 2553 to elect S Corp tax treatment. California recognizes the election for state purposes. The LLC remains an LLC under state law but is taxed as an S Corp for both federal and California purposes.
04 · Compare against
Run the model against another state.
05 · Methodology