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Tax: What is a franchise tax and who pays it?

There various types of taxes and different people need to pay them. Franchise taxes are for specific businesses.

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Franchise taxes are paid by certain businesses in certain states.

It lets a company be chartered and operate in that state.

This means if it’s chartered in a different state, it could be subject to being this law in other states.


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Which states have the franchise tax?

Franchise bills are paid in exchange for a business to have the right to operate as a legal entity in a specific area.

Alabama, Arkansas, California, Delaware, Georgia, Illinois, Louisiana, Mississippi, New York, North Carolina, Oklahoma, Tennessee, and Texas had this in 2020.


It isn’t a tax on a franchise business.

It’s for businesses like LLCs to operate within a state’s borders.

Nonprofits, limited liability companies, and fraternal organizations are exempt from this law.

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