Annual tax: partnerships and LLCs.

The bill now extends tax relief to limited partnerships (Section 17935), limited liability companies (Section 17941), and limited liability partnerships (Section 17948), not just corporations. Previously the bill only reduced the corporate minimum franchise tax based on gross receipts tiers.

A new flat $80 annual tax is imposed on limited partnerships, LLCs, and limited liability partnerships for taxable years beginning on or after January 1, 2025, and before January 1, 2030. This replaces the prior full $800 annual tax these entities would otherwise owe.

First-year tax exemptions for entities that organized or registered between January 1, 2021 and January 1, 2024 are removed from all three pass-through entity sections (17935(f), 17941(g), 17948(e)). These were replaced by the new $80 provisions.

The sunset date for the deployed military business exemption is accelerated: for LLCs it moves from January 1, 2030 to January 1, 2025 (Section 17941(f)(4)), and for corporations it moves from January 1, 2030 to January 1, 2026 (Section 23153(i)(4)).

The amendment to Section 23004 of the Revenue and Taxation Code (regarding Franchise Tax Board regulations) is removed from the bill entirely.

The bill now includes additional information required under Section 41 of the Revenue and Taxation Code for bills authorizing a new tax expenditure, including performance indicators expanded to cover partnerships and LLCs.

The entire amendment to Section 23153 was removed. This eliminates the gross-receipts-based tiered minimum franchise tax for corporations ($200 under $2.5M, $400 under $7.5M, $600 under $15M, $800 at or above $15M). The bill no longer affects corporate minimum franchise tax.

The bill title and digest were updated to remove references to Section 23153 and to corporations. The legislative goal changed from 'reduce costs for California small businesses' to 'make California's business environment more competitive for California partnerships and limited liability companies.'

The reduced annual tax for limited partnerships, LLCs, and LLPs was increased from $80 to $200 across all three entity types (Sections 17935(f), 17941(g), and 17948(e)).

The effective period for the reduced tax was shifted one year later: now applies to taxable years beginning on or after January 1, 2026 (was 2025) and before January 1, 2031 (was 2030).

The Franchise Tax Board reporting deadline was changed from December 1, 2026 to April 1, 2028, giving the agency additional time before its first required report to the Legislature.

Cross-references within Sections 17935, 17941, and 17948 were simplified from 'subparagraph (A) of paragraph (1) of subdivision (d) of Section 23153' to 'subdivision (d) of Section 23153,' reflecting the removal of the tiered structure from this bill.

The reduced annual tax for limited partnerships, LLCs, and LLPs is increased from $200 to $600 per year across all three entity types (Sections 17935(f), 17941(g), and 17948(e)).

The effective period for the reduced tax is shifted one year later: from taxable years beginning on or after January 1, 2025, and before January 1, 2030, to taxable years beginning on or after January 1, 2026, and before January 1, 2031.

The stated legislative goal is narrowed from 'reduce costs make California's business environment more competitive' to simply 'make California's business environment more competitive,' removing the explicit cost-reduction objective.

The deadline for the first Franchise Tax Board performance report to the Legislature is delayed from December 1, 2026 to April 1, 2028, with annual reports continuing thereafter.

Replaces the flat $800 minimum franchise tax with a tiered system based on gross receipts for taxable years beginning on or after January 1, 2025: $200 for gross receipts under $2.5 million, $400 for $2.5 million to under $7.5 million, $600 for $7.5 million to under $15 million, and $800 for $15 million or more.

Adds a first-year minimum franchise tax exemption for limited partnerships, limited liability companies, and limited liability partnerships that organized or registered with the Secretary of State on or after January 1, 2021 and before January 1, 2024. The exemption is operative only if the budget appropriates at least $1 to the Franchise Tax Board for administration costs.

Shortens the inoperative date of the deployed military member small business exemption from January 1, 2030 to January 1, 2025 for limited liability companies and to January 1, 2026 for corporations.

Requires the Franchise Tax Board to submit an annual report to the Legislature on or before December 1, 2026, and annually thereafter, on the performance of small businesses affected by the tax reduction, using data on the number of small businesses impacted.

The bill takes effect immediately as a tax levy under Article IV of the California Constitution, meaning it reduces state revenue without requiring a two-thirds legislative vote.