A tax that is generally imposed annually on corporations (and sometimes on other entities such as partnerships, S-corporations, and LLCs) by their state of incorporation (or organization), typically for the privilege of incorporating (or being organized) in that state. The amount and calculation of the tax varies from state to state. Not all states have a franchise tax.

For more information about the franchise tax in Delaware, see Standard Document, Certificate of Incorporation (Short Form DE), Practice Note, Dissolving a Delaware Corporation, and Stock Split Checklist.