AB 2625 Summary

• Reduces minimum franchise tax and annual tax for new microbusinesses for taxable years beginning January 1, 2017 through January 1, 2020, up to five initial taxable years of existence.

• Establishes tiered reduced tax rates based on gross receipts: $200 for receipts of $50,000 or less; $400 for receipts over $50,000 to $100,000; $600 for receipts over $100,000 to $150,000.

• Applies reduced rates to corporations, limited partnerships, limited liability companies, and limited liability partnerships that qualify as "new microbusinesses" organized on or after January 1, 2017.

• Requires aggregation of gross receipts from related businesses (as defined under Internal Revenue Code sections 267, 318, and 707) to determine if a new microbusiness qualifies for reduced tax rates.

• Imposes additional tax equal to the difference between reduced rate paid and standard rate if actual gross receipts exceed the estimated amount used to determine the reduced rate.