Guide
What Is Franchise Tax? It Is Not a Tax on Franchises
Quick answer
Franchise tax is a charge for the privilege of existing as a registered entity in a state. It has nothing to do with franchising. It is generally not based on profit, which is why a company that earned nothing still owes it.
What follows from that
You owe it whether or not you traded. California states this directly: the tax is due "even if you are not conducting business, until you cancel your LLC." A dormant company is still a registered company.
The basis varies by state. Some charge a flat amount, some use assets, some use income, some use shares. There is no single formula and comparing states by headline number alone is misleading.
It is separate from income tax. Paying franchise tax says nothing about your federal position, and a state with no income tax can still levy it. Wyoming is exactly that case.
Three states, verified
| State | Amount | Basis | Due |
|---|---|---|---|
| Wyoming | $60 minimum | $60 or two-tenths of one mill ($.0002) on assets located and employed in Wyoming, whichever is greater | First day of your anniversary month |
| Delaware | $400 | Flat, for LLCs | June 1, for the prior calendar year |
| California | $800 minimum | Flat, plus a separate income-based fee above a quarter of a million dollars | 15th day of the 4th month of the taxable year |
Wyoming, in its own words:
Wyoming charges an annual report license tax of $60 or two-tenths of one mill on the dollar of assets located in Wyoming, whichever is greater, due the first day of the anniversary month of formation.[1]
Because the mill rate applies only to Wyoming assets, a non-resident-owned LLC with none pays the minimum.
Delaware, by statute:
Every domestic and foreign Delaware LLC owes a flat $400 annual tax, due on or before June 1, and files no annual report.[2]
The figure moved. House Bill 400, signed May 21, 2026, raised it effective January 1, 2026, and Delaware's own tax FAQ page still shows the old figure.
California:
Every LLC doing business in California or organized in California owes an $800 annual tax, and it keeps falling due even in a year with no trading, until the LLC is cancelled.[3]
Note the trigger: doing business in California, or organized there. Either one. So a Wyoming LLC with California nexus owes California too.
The trap in the word "minimum"
California's is a floor. Above a quarter of a million dollars of California income a separate LLC fee applies on top, on a banded schedule that rises steeply. The bands are on the California page.
Wyoming's is likewise a minimum that rises with Wyoming assets.
Delaware's is genuinely flat for LLCs, which is unusual and worth knowing.
What we have not verified
Texas is commonly cited in this context and we have not verified its franchise tax treatment first-hand as of September 1, 2026. Neither have we verified New Mexico or Florida. Those figures are not on this page for that reason.
Sources
| Claim | Source |
|---|---|
| Wyoming amount and mill-rate basis | Wyoming Secretary of State FAQs |
| Delaware $400 and June 1 | 6 Del. C. § 18-1107, Delaware Code |
| California $800, trigger, and the fee above $250,000 | California FTB |
| Texas, New Mexico, Florida | Not verified |
Sources
- [1]Wyoming Secretary of State, Annual Report and License Tax Rules — The annual report license tax is $60 or two-tenths of one mill on the dollar ($.0002) whichever is greater, based on the company's assets located and employed in the state of Wyoming. (retrieved )
- [2]State of Delaware, Delaware Code, 6 Del. C. § 18-1107(b) — Every domestic limited liability company and every foreign limited liability company registered to do business in the State of Delaware shall pay an annual tax, for the use of the State of Delaware, in the amount of $400. (retrieved )
- [3]California Franchise Tax Board, Limited liability company — Every LLC that is doing business or organized in California must pay an annual tax of $800. (retrieved )
Related
- The U.S. LLC for Non-U.S. FoundersStart here — the complete overview
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Last updated: September 1, 2026.
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