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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 Illinois, the franchise tax is a tax levied on corporations for the privilege of conducting business in the state, being registered to conduct business in the state, or existing as a corporation under Illinois law. This tax is administered by the Illinois Department of Revenue. The franchise tax is calculated based on a corporation's paid-in capital and is payable annually. As of January 1, 2021, Illinois began phasing out the corporate franchise tax. Public Act 101-0009 provides for the phase-out of the franchise tax for most corporations, with the goal of completely eliminating the tax by January 1, 2024. During the phase-out period, the initial franchise tax has been eliminated for new businesses, and the annual franchise tax has been reduced for existing businesses, with further reductions each year until the tax is fully repealed.

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Taxes

franchise tax

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Taxes

franchise tax

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