When businesses or individuals miss state tax deadlines, each jurisdiction imposes its own penalties and interest. Understanding how California, New York, Texas, and Florida handle late filings can help you manage compliance and avoid unexpected fees. Below, we provide an in-depth comparison of late filing penalties, minimums, and interest rules in each state.
📌 California
Jurisdiction: Franchise Tax Board (FTB) for income/franchise tax; Employment Development Department (EDD) for payroll.
Penalty Structure:
- Income/Franchise Tax: 5% of unpaid tax per month (or fraction) late, up to 25% maximum.
- Minimum Penalty: $135 or 100% of tax due if return over 60 days late and tax owed is under $135.
- Interest: Accrues on unpaid tax from original due date at current FTB rate (approx. 6% – 8% annually), compounded daily.
Example: A corporation owing $10,000 files three months late: 5%×3 = 15% → $1,500 penalty, plus daily‐compounded interest on $10,000 from April 15.
📌 New York
Jurisdiction: New York State Department of Taxation and Finance.
Penalty Structure:
- Income/Franchise Tax: 5% of unpaid tax per month (or fraction) late, up to 25% maximum.
- Minimum Penalty: $210 if return is over 60 days late and any tax is due.
- Interest: Accrues on unpaid tax at the “penalty rate” (currently ~7% annually), compounded daily from the original due date.
Example: A partnership owing $5,000 files two months late: 5%×2 = 10% → $500 penalty, plus interest on $5,000 from March 15.
📌 Texas
Jurisdiction: Texas Comptroller of Public Accounts – franchise tax (no state income tax for individuals).
Penalty Structure:
- Franchise Tax Return: 5% of tax due if filed 1–30 days late; 10% if 31–60 days late; 15% if over 60 days late.
- Minimum Penalty: $1,000 or 10% of tax due (whichever is less) if more than 30 days late.
- Interest: 1% per month (12% annually), compounded monthly on unpaid tax starting the day after the due date.
Example: A business owing $8,000 files 45 days late: 10% → $800 penalty, plus 1% per month interest on $8,000.
📌 Florida
Jurisdiction: Florida Department of Revenue – corporate income/franchise tax (no personal income tax).
Penalty Structure:
- Corporate Income Tax: 10% of tax due if filed late.
- Minimum Penalty: $100 for any late corporate return.
- Interest: 4.5% annually (adjusted quarterly), compounded monthly on unpaid tax from original due date.
Example: A corporation owing $3,000 files two months late: 10% → $300 penalty, plus ~0.375% monthly interest on $3,000.
📊 Summary Comparison Table
| State | Late Filing Penalty | Minimum Penalty | Interest Rate |
|---|---|---|---|
| California | 5% per month (max 25%) | $135 or 100% tax if >60 days late | ~6–8% annually (daily) |
| New York | 5% per month (max 25%) | $210 if >60 days late | ~7% annually (daily) |
| Texas | 5% (1–30 days), 10% (31–60 days), 15% (>60 days) | $1,000 or 10% if >30 days late | 12% annually (monthly) |
| Florida | 10% flat | $100 | 4.5% annually (monthly) |
✅ Key Takeaways
- California and New York use similar percentage‐based penalties with significant minimums after 60 days.
- Texas and Florida lack personal income tax but impose distinct franchise/corporate penalties.
- Interest rates and compounding methods differ—consult each state’s revenue website for updates.
- Filing an extension can help avoid late‐filing penalties, but taxes remain due on the original deadline.
- Document any reasonable cause (natural disasters, illness, system failures) to request penalty abatement.
By understanding each state’s penalty framework and planning accordingly—through timely extensions, estimated payments, and prompt filings—businesses can minimize the financial impact of late state tax returns.
