Annual tax: partnerships and LLCs.

Senator Choi's proposal to modify California's business tax structure would reduce the annual minimum franchise tax from $800 to $80 for limited partnerships, limited liability partnerships (LLPs), and limited liability companies (LLCs) operating in the state. The tax reduction would apply from January 2025 through January 2030.

The legislation maintains existing registration and operational requirements while adjusting the tax obligations for these business entities. Under current law, these organizations must pay the annual tax until formally dissolving or canceling their registration with the Secretary of State. The bill preserves special provisions for small businesses owned by deployed military personnel, allowing tax exemptions when these companies operate at a loss or cease operations during the owner's deployment.

To evaluate the policy's outcomes, the Franchise Tax Board must submit annual reports to the Legislature beginning December 2026, tracking the number of affected partnerships and LLCs. The measure includes immediate implementation provisions as a tax levy under the California Constitution, requiring a majority vote for passage.