For S corporations the tax rate was 1.5 percent. Banks and financial corporations were required to pay an additional in-lieu tax of 2.17 percent. This in-lieu tax is imposed in order to adjust for exemptions from certain local levies that are allowed to banks and financial corporations. Thus, the composite bank and financial corporation tax rate was 3.67 percent for financial S corporations and 11.470 percent for banks and other financial corporations not electing S corporation status. Estimated Tax Corporations are required to pay their tax on a current basis through estimated tax payments for the privilege of exercising their franchise to do business in California.
Corporations pay the estimated tax in quarterly installments during the income year.
This represents 5.7 percent of the total tax liability. These overpayments were either applied to the estimated tax for the next year, applied to another income year's liability, or refunded.