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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 Massachusetts, the concept of a franchise tax does not apply in the same way it does in some other states. Instead, Massachusetts imposes a corporate excise tax on corporations doing business in the Commonwealth. This tax is a combination of a tax on income and a tax on either the corporation's tangible property or net worth. The income-based portion of the tax is calculated at a rate of 8% of the corporation's net income apportioned to Massachusetts. Additionally, the non-income measure of the corporate excise is either $2.60 per $1,000 of Massachusetts tangible property or an amount based on the corporation's net worth, whichever is greater. Limited liability companies (LLCs) and other business entities are subject to different taxation rules, such as the personal income tax for LLCs that are disregarded entities or partnerships for tax purposes. It's important for businesses to consult with an attorney or a tax advisor to understand their specific tax obligations in Massachusetts.

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Taxes

franchise tax

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Massachusetts State Code

Massachusetts State Code

Taxes

franchise tax

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