On August 29, 2023, the California Franchise Tax Board (FTB) issued the indexed values relating to Personal Income Tax Law for tax year 2023. These values include standard deductions, personal exemptions, and various tax credits.
In addition, the FTB issued indexed thresholds for “doing business” in the state for purposes of Revenue and Taxation Code (RTC) Section 25120 (c)(e)(f). Since 2011, “doing business” has meant actively engaging in any transaction for the purpose of financial gain or profit, once any of the following conditions has been met:
- The taxpayer is organized or commercially domiciled in the state.
- Sales of the taxpayer in California exceed the lesser of $500,000 or 25% of the taxpayer’s total sales.
- The property of the taxpayer in the state exceeds the lesser of $50,000 or 25% of the taxpayer’s total property.
- The amount paid by the taxpayer in the state for compensation exceeds the lesser of $50,000 or 25% of the taxpayer’s total compensation.
For tax year 2023, the indexed threshold values are:
- Sales $711,538
- Property $71,154
- Payroll $71,154
Please contact the Ryan tax professionals below to determine how these changes apply to your business.
TECHNICAL INFORMATION CONTACTS:
Mark L. Nachbar
Principal
Ryan
630.515.0477
mark.nachbar@ryan.com
Gina Rodriquez
Principal
Ryan
916.414.0400
gina.rodriquez@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.