Senator Suzette Valladares from Santa Clarita has introduced Senate Bill 816, which proposes to exempt small businesses in California from the state’s $800 annual franchise tax. This bill targets businesses with 25 or fewer employees and gross receipts not exceeding $5 million. The objective is to lower financial barriers for small enterprises, thereby encouraging new startups and stimulating economic growth.
“Small businesses have long been the backbone of California’s economy, driving innovation, job creation and contributing vibrancy to our local economies,” stated Senator Valladares. She emphasized that excessive taxes hinder entrepreneurial pursuits in the state. “This needed tax relief for small businesses will reduce a major financial hurdle and allow more Californians to pursue their entrepreneurial dreams.”
Currently, all corporations operating in California must pay an annual minimum franchise tax of $800. This fixed obligation poses a significant challenge for smaller entities that often have limited resources. SB 816 aims to alleviate this burden by offering cost relief.
Andres Kabrera, who owns Rio Latin Bistro in Lancaster, supports the bill. He commented on the challenges faced due to high taxes: “Eliminating the franchise tax would give us the breathing room we need to invest, hire more employees and improve our services.” Kabrera noted that savings could be reinvested into strengthening their business.
The proposed exemption would apply starting January 1, 2025, providing immediate financial relief for qualifying small businesses. Senator Valladares concluded by stating, “If passed, this bill will expand opportunity for millions of Californians who have a dream to start or expand a small business.”
