SB 816 would serve as cost relief for small businesses in California
A bill that would exempt most small businesses in the state from paying the state’s $800 annual franchise tax was officially introduced in the Senate on Wednesday.
Click Here to Subscribe to the California Political Review
Senate Bill 816, authored by Senator Suzette Valladares (R-Santa Clarita), would specifically exempt all small businesses with 25 or fewer employees and maximum gross receipts of $5 million from paying the state’s $800 minimum annual franchise tax. If passed, SB 816 would begin the exemption immediately, with taxable years beginning on or after January 1, 2025.
Senator Valladares wrote the bill because of the franchise tax being a $800 fixed financial obligation for small businesses that operate on tight budgets. In her introduction letter, the Senator said that the tax has become a significant burden to small businesses in recent years, with larger businesses having to pay the tax being able to easily afford it. And with growing business costs and prices inflating, SB 816 would serve as cost relief for small businesses, reduce financial barriers for them, encourage new startups and stimulate economic growth in the state.
“Small businesses have long been the backbone of California’s economy, driving innovation, job creation and contributing vibrancy to our local economies,” remarked Senator Valladares on Wednesday. “But California’s excessive taxes and fees make the dream of owning a small business out of reach for too many Californians. We must do more to expand opportunity and encourage innovation, not deter it. This needed tax relief for small businesses will reduce a major financial hurdle and allow more Californians to pursue their entrepreneurial dreams.
“If passed, this bill will expand opportunity for millions of Californians who have a dream to start or expand a small business. We must do more to make the American Dream a reality for more Californians.”
This is encouraging news, but seems very generous – maybe 10 or fewer employees and $1M gross receipts would be more likely to pass in this State?