Franchise Tax Calculator 2026 β Texas, Delaware, California
Calculate state franchise tax for Texas (0.375%/0.75% margin tax), Delaware (authorized shares vs assumed par value), and California ($800 minimum + LLC fee tiers). Compare multi-state franchise tax burden.
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No tax due if under $2.47M (2026 threshold) $
COGS deduction reduces taxable margin $
Alternative deduction to COGS Calculator picks the lowest taxable margin
Examples:
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Franchise Tax Due
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Effective Rate on Revenue
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Method / Basis
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Filing Status
Franchise Tax Calculation Detail
How State Franchise Taxes Work
Franchise taxes are assessed by the state where you form or do business, separate from income taxes. Each state uses different formulas β Texas uses revenue margin, Delaware uses share structure, California uses a flat minimum plus revenue tiers.
Texas Margin Tax Formula
No-tax-due threshold: $2.47M annualized revenue (2026)
Taxable Margin = Lowest of:
Revenue β COGS
Revenue β Compensation
Revenue Γ 70%
Tax = Taxable Margin Γ 0.75% (most) or 0.375% (retail/wholesale)
E-Z Computation: Total Revenue Γ 0.331% (for revenue under $20M)
Taxable Margin = Lowest of:
Revenue β COGS
Revenue β Compensation
Revenue Γ 70%
Tax = Taxable Margin Γ 0.75% (most) or 0.375% (retail/wholesale)
E-Z Computation: Total Revenue Γ 0.331% (for revenue under $20M)
Delaware Franchise Tax Formula
Authorized Shares Method:
β€5,000 shares: $175 | 5,001β10,000: $250 | +$85 per 10,000 additional
Assumed Par Value Capital Method:
Assumed Par = Total Assets Γ· Issued Shares
Assumed Par Capital = Assumed Par Γ Authorized Shares
Tax = Assumed Par Capital Γ 0.35% (min $400, max $200,000)
β€5,000 shares: $175 | 5,001β10,000: $250 | +$85 per 10,000 additional
Assumed Par Value Capital Method:
Assumed Par = Total Assets Γ· Issued Shares
Assumed Par Capital = Assumed Par Γ Authorized Shares
Tax = Assumed Par Capital Γ 0.35% (min $400, max $200,000)
Extended
Multi-State Franchise Tax Comparison
Compare franchise tax liability across Texas, Delaware, and California for the same business
See how franchise tax compares across all three states for the same business. Revenue and structure details from the main calculator are used.
| State | Basis | Rate / Method | Estimated Tax | Deductible? |
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Frequently Asked Questions
What is a franchise tax and who pays it?
A franchise tax is a privilege tax charged by a state for the right to do business there β it is not a tax on business income (though it may be calculated based on income, revenue, or assets). Texas, Delaware, California, and many other states impose franchise taxes on corporations, LLCs, and other entities formed or doing business in the state. The tax is separate from federal and state income taxes.
How does the Texas franchise tax work in 2026?
Texas franchise tax applies to most entities doing business in Texas. For 2026, the no-tax-due threshold is $2.47M in annualized total revenue β entities below this file an information report with no payment. Above the threshold: the tax rate is 0.75% of "taxable margin" for most businesses, or 0.375% for qualifying wholesalers and retailers. An E-Z computation method is also available: 0.331% of total revenue for businesses with revenue under $20M.
How does Delaware franchise tax work for corporations?
Delaware offers two methods for calculating franchise tax: (1) Authorized Shares Method β $175 for up to 5,000 shares, $250 for 5,001β10,000, then $85 per 10,000 additional shares (this often creates large bills for companies with many authorized shares); (2) Assumed Par Value Capital Method β generally produces much lower taxes for companies with many authorized shares but low actual assets. Delaware requires you to pay the lower of the two methods. Minimum tax is $175.
What is the California franchise tax minimum?
California charges a minimum franchise tax of $800 per year for all corporations, LLCs, LPs, and LLPs β even if they have no income or are inactive. Additionally, LLCs pay an annual fee based on total California income: $0 for under $250K, $900 for $250Kβ$499,999, $2,500 for $500Kβ$999,999, $6,000 for $1Mβ$4,999,999, and $11,790 for $5M+. Sole proprietors and single-member LLCs taxed as disregarded entities pay the $800 minimum but generally not the LLC fee.
Is franchise tax deductible on federal taxes?
Yes β state and local franchise taxes paid are generally deductible as ordinary and necessary business expenses on your federal tax return. For C-corporations, franchise taxes are deducted on Form 1120. For pass-through entities (S-Corps, partnerships, LLCs), the deduction flows through to owners on their Schedule K-1 and reduces business income reported on Schedule E. This deductibility partially offsets the franchise tax cost depending on your federal tax rate.