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Franchise tax

A state's yearly tax on a company for existing or doing business there, nothing to do with franchises; Delaware corporations and Texas companies owe one.

The short answer, then the detailChecked September 2026

The detail

What it means in practice.

Despite the name, a franchise tax has nothing to do with franchises. It's a state's yearly tax on a company for being formed or doing business there, calculated on shares, assets, margin or a flat amount depending on the state. Delaware corporations pay one by 1 March. Texas companies file a franchise tax report and owe tax only above a revenue threshold. California's $800 yearly LLC tax works in a similar way.

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