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franchise tax

A franchise tax is a state tax on businesses and other entities (corporations, limited liability companies, trusts, etc.) that are formed in or doing business in a state.

A franchise tax is said to be a tax on the privilege of doing business in a state and is sometimes referred to as a privilege tax. The amount of tax due is often calculated as a percentage of a business’s income, for example.

In Alabama, the franchise tax, also known as the Business Privilege Tax, is levied on all entities doing business in the state. This includes corporations, limited liability companies (LLCs), limited partnerships (LPs), and business trusts. The tax is calculated based on the entity's net worth in Alabama or the entity's capital employed or business done in Alabama, with a minimum tax amount that all entities must pay. The specific rates and minimum tax can vary, and there are different rate schedules for financial institutions and insurance companies. The Alabama Department of Revenue administers the Business Privilege Tax, and entities are required to file an annual report and tax return. It's important for businesses to consult with an attorney or a tax professional to understand their specific obligations under Alabama's franchise tax laws.

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Taxes

franchise tax

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Alabama State Code

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Taxes

franchise tax

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