Tax election services
California S corporation election
S corporation status is a tax election, not a separate California formation type. An eligible entity generally elects federal S corporation treatment using IRS Form 2553. California generally imposes a 1.5% S corporation tax with an $800 minimum, subject to the newly formed corporation first-taxable-year minimum-tax exception and other specific rules.
Last reviewed: October 2026
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The requirements
What to know before you file
IRS Form 2553
Confirm entity and shareholder eligibility. The election generally must be filed within two months and 15 days after the start of the tax year it is to take effect, or during the preceding tax year.
Official source: Internal Revenue ServiceCalifornia / 1.5% tax
The general rate is 1.5% of California-source income with an $800 minimum franchise tax. Financial S corporations use a different rate.
Official source: California Franchise Tax BoardFirst-year minimum exception
A newly formed or qualified S corporation filing its initial first-taxable-year return generally does not pay the $800 minimum, but its net income is still subject to the applicable S corporation tax.
Official source: California Franchise Tax BoardAdvice before election
Tax treatment depends on eligibility and circumstances. Ask a qualified tax adviser whether an S election is appropriate; filing assistance is not tax advice.
Official source: Internal Revenue ServiceThe answers that matter
Frequently asked questions
No. An eligible entity generally files Form 2553 to elect S corporation tax treatment.
Official source: Internal Revenue ServiceNo. The general rate is 1.5% with an $800 minimum, subject to applicable exceptions. First-year income-based tax can still apply.
Official source: California Franchise Tax BoardYour next chapter. In California.
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Corp USA is not a law firm and does not provide legal advice.