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.

Official source: https://www.irs.gov/instructions/i2553 Official source: https://www.ftb.ca.gov/file/business/types/corporations/s-corporations.html

Last reviewed: October 2026

Order S election assistance

Corp USA is not a law firm and does not provide legal advice.

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: https://www.irs.gov/instructions/i2553

California / 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: https://www.ftb.ca.gov/file/business/types/corporations/s-corporations.html

First-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: https://www.ftb.ca.gov/file/business/types/corporations/s-corporations.html

Advice 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: https://www.irs.gov/instructions/i2553