California Corporate Income Tax Brackets

California has a flat corporate income tax rate of 8.84% of gross income, unlike the federal corporate income tax which uses tax brackets based on marginal income.California's maximum marginal corporate income tax rate is the 10th highest in the United States, ranking directly below California's 8.84%.

1.2

California Business Tax

California's corporate income tax is a business tax collected on the gross taxible income of most companies and corporations registered in California. The California corporate income tax is the business equivalent of the California personal income tax, and is based on a bracketed tax system. All California businesses must file a California corporate tax return with the California Department of Revenue as well as a federal business return with the IRS.

1.3

California Nonprofit Tax Exemptions

Certain nonprofit entities registered in California may be able to exempt some or all of their qualifying income from California and federal income taxes. Specifically, certified California 501(c) nonprofit corporations are exempt from the California corporate income tax. Some of the most common 501(c) organizations include:

Labor Unions

Labor unions and worker's organizations are exempt from taxation on dues and other forms of income. Covered under § 501(c)(4) and § 501(c)(5) of the IRC.

Tax-Exempt Religious Institutions

Bona-fide religious institutions including churches, synagogues, and mosques are exempt from corporate income taxes under § 501(c)(3) of the IRC

Educational & Scientific Institutions

Nonprofit educational and scientific groups are tax-exempt, including nonprofit schools and colleges and certain research institutions. Covered under § 501(c)(3) of the IRC.

Tax-Exempt Recreational Organizations

Social clubs and recreational groups may collect dues and other funds as a tax-free organization as long as the primary purpose of the group is not for profit. Covered under § 501(c)(7) of the IRC.

Tax-Exempt Charities

Bona-fide charities are exempt from all corporate income taxes, including both religious and non-religious charities. Covered under § 501(c)(3) of the IRC.

In order to gain California tax-exempt status, a corporation must qualify as a 501(c) and obtain a Nonprofit Tax-Exempt ID Number from the IRS. California may also require nonprofits to file additional paperwork with the California Department of Revenue to gain exemption from California's corporate taxes.

1.4

Federal Corporate Income Tax Brackets 2012

In addition to the California corporate income tax, California corporations must also pay the federal corporate income tax. Like the personal income tax the federal business tax is bracketed based on income level, with eight corporate tax brackets ranging from a low of 15% for earnings under $50,000 to a high of 35% for earnings over $18,333,333.

All California state taxes are deductible from gross income when calculating federal taxes, so any California corporate income tax paid can be deducted from your business' gross taxable income before calculating your federal taxable income.

Tax Bracket ($)	Marginal Corporate Income Tax Rate
$0 to $50,000	15%
$50,000 to $75,000	$7,500 + 25% Of the amount over 50,000
$75,000 to $100,000	$13,750 + 34% Of the amount over 75,000
$100,000 to $335,000	$22,250 + 39% Of the amount over 100,000
$335,000 to $10,000,000	$113,900 + 34% Of the amount over 335,000
$10,000,000 to $15,000,000	$3,400,000 + 35% Of the amount over 10,000,000
$15,000,000 to $18,333,333	$5,150,000 + 38% Of the amount over $15,000,000
$18,333,333 and up	35%

¹ A printable PDF document of the 2012 state corporate income tax brackets can be downloaded here