StructureCost2026

S corp vs C corp in California: which costs less (2026)

At $100,000 profit in California, an S corporation costs $23,188 a year in tax and fees and a C corporation costs $32,215. On these figures a C corporation does not cost less at any profit up to $500,000.

More settings revenue, salary, filing status, payroll costs, PTET

+$9,027 a year

more for a C corporation than an S corporation in California, at these numbers.

With these settings the switch does not pay at any profit from $10,000 to $500,000.

California, 2026: $100,000 profit, single filer

ItemS corpC corpChange
Statement of Information (Form SI-550)sos.ca.gov, checked Oct 23, 2026$25$25$0
Payroll tax on your salaryirs.gov, 2026 rates$6,407$6,407$0
State disability and paid leaveedd.ca.gov, checked Oct 23, 2026$520$520$0
Payroll service and tax return (estimate)$1,800$2,000+$200
California S corporation tax (1.5%)ftb.ca.gov, checked Oct 23, 2026$823$0−$823
California pass-through entity tax, paid by the company (elected)ftb.ca.gov, checked Oct 23, 2026$5,022$0−$5,022
Federal income taxirs.gov, 2026 rates$8,591$4,689−$3,902
State corporate income taxftb.ca.gov, checked Oct 23, 2026$0$4,829+$4,829
Federal corporate income tax (21%)irs.gov, 2026 rates$0$10,458+$10,458
State income taxftb.ca.gov, checked Oct 23, 2026$0$3,287+$3,287
Yearly cost$23,188$32,215+$9,027
What these figures count
  • State income tax, and state taxes on the business itself: franchise, LLC, S corp, gross receipts and excise taxes.
  • Social Security and Medicare on both sides of an owner salary, federal unemployment tax and the state's new-employer rate.
  • The 20% qualified business income deduction with its income limits and the professional-service rule.
  • Yearly report fees, and a cost you can change for payroll and the business tax return.

Many S corp calculators leave out state taxes and the QBI deduction, which can make the election look better than it is.

Yearly cost at each profit level

ProfitS corpC corpDifference
$30,000$8,057$8,379+$322
$50,000$11,659$13,799+$2,140
$75,000$15,643$21,754+$6,111
$100,000$23,188$32,215+$9,027
$150,000$39,908$55,743+$15,835
$200,000$57,761$78,455+$20,694
$300,000$95,374$124,590+$29,216

Federal and California tax and fees, single filer, revenue 1.5 times profit, default salary for S and C corps. "Difference" is C corporation minus S corporation.

What the switch takes in California

  1. Revoke the S election with a statement to the IRS signed by owners of more than half the shares. See ending an S election. A new S election then has to wait five years.
  2. Federal return each year: Form 1120, due April 15 for a calendar year.
  3. State upkeep each year: Statement of Information (Form SI-550), $25 a year, due within 90 days of formation, then every year by the end of the registration month.

What changes between the two

A C corporation pays 21% federal tax and California corporate tax on its profit, and the owner pays tax again on dividends (the double tax). An S corporation pays no federal income tax itself: profit lands on the owner's return, where the 20% qualified business income deduction can apply.

The figures assume all C corp profit after tax is paid out as dividends. Profit kept in the company to grow it is taxed only at the corporate rate until it is paid out, which is where a C corp can come out ahead.

Questions

How much does it save at $100,000 in California?

Nothing. C corporation costs $9,027 a year more ($32,215 against $23,188).

When does a C corp make sense in California?

Mostly when profit stays in the company, when outside investors need one, or for the qualified small business stock exclusion. For an owner who takes the profit out, the second tax on dividends usually costs more. On these figures it never costs less up to $500,000.

More for California

Common cases in California

Other states