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 Oklahoma, the franchise tax is imposed on corporations doing business in the state. It is indeed considered a tax on the privilege of conducting business within Oklahoma's jurisdiction. The tax is calculated based on the corporation's capital invested or used in Oklahoma. As of the knowledge cutoff in 2023, the rate is $1.25 for each $1,000 of capital invested or used in the state, with a minimum tax of $250 and a maximum of $20,000 per year. It's important to note that not all business entities are subject to this tax; for example, limited liability companies (LLCs), limited partnerships (LPs), and certain other entities are typically exempt from the Oklahoma franchise tax. Additionally, there are specific filing requirements and deadlines that corporations must adhere to in order to remain compliant with the state's franchise tax regulations.