Taxation: corporations: minimum franchise tax: limited liability companies: annual tax: microbusinesses.

Senator Valladares proposes exempting certified microbusinesses from California's $800 minimum franchise tax and annual taxes, modifying tax obligations for corporations, limited partnerships, limited liability companies, and limited liability partnerships operating in the state.

The legislation creates tax exemptions for businesses certified as microbusinesses under state law, beginning January 1, 2025. Currently, these entities must pay an annual $800 minimum franchise tax or equivalent annual tax to operate in California. Under the proposal, qualifying microbusinesses would be exempt from these payments while maintaining their certification status.

The bill preserves existing exemptions, including provisions for military-owned small businesses and inactive mining corporations. Military-owned entities operating at a loss or ceasing operations during the owner's combat deployment retain their tax exemption through 2030. The $25 minimum tax also continues for certain inactive gold and quicksilver mining corporations.

Implementation requires businesses to obtain and maintain microbusiness certification through established state processes. The Franchise Tax Board maintains authority to verify eligibility and enforce compliance through existing notification and monitoring systems. As a tax levy, the measure would take immediate effect upon enactment.