If your business is based in California and structured as an LLC or S Corporation, this update is for you.

Many California business owners are facing a June 15 deadline for a prepayment to the Franchise Tax Board (FTB) for the 2025 tax year. Specifically, this payment is tied to California’s Pass-Through Entity Tax (PTE) program—a program that may soon be changing.

Here’s what you need to know:

Congress is actively debating a new federal tax bill, and Governor Newsom recently released a draft proposal for next year’s California budget. Both contain provisions that could significantly alter—or even eliminate—the PTE tax program.

Because of the potential changes, we’re advising our clients not to submit the June 15 PTE prepayment just yet.

While nothing has been finalized in Washington or Sacramento, the best strategy right now is to wait and see. We’re buying time to avoid making a payment that may not be necessary.

We’ll be keeping a close eye on the developments and will provide a clear update next week. For now, please hold off on sending in that payment.

Have questions or need personalized guidance? We’re here to help.