Glossary

Franchise tax

A recurring state charge for the privilege of operating an entity there, separate from income tax.

Some states charge a flat amount, others compute it from revenue, capital or margin, and several exempt entities below a revenue threshold entirely. It is not a tax on profit — a business with no profit can still owe it. Because the amount often depends on figures no calculator knows, an honest presentation gives the published floor and the formula rather than a single invented number. Franchise tax is frequently the largest recurring cost of an entity, and the one most often missing from cheap-state comparisons.

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