The Illinois franchise tax was repealed in 2020. However, that repeal won’t go into effect until December 31, 2025, so you must continue to pay the franchise tax until then. The tax liability will change from year to year until the repeal is completed.
In 2023, franchise businesses in Illinois are required to remit a franchise tax amounting to 0.1% of their paid-in capital, capped at $1 million. Yet, a $100,000 exemption is applicable, setting the minimum franchise tax at $25.
The franchise tax is actually three separate taxes, all based on paid-in capital. Paid-in capital is the money investors pay in return for their shares of stock. Under the law in 2019, the annual and initial taxes required payments of a minimum of $25 and maximum of $2 million. Legislation passed by the General Assembly and signed by Gov. JB Pritzker in June 2019 called for phasing out the franchise tax, with total elimination of the tax by 2024. In 2021, this legislation was repealed by Democrats. The General Assembly repealed the franchise tax, and the Governor has signed the repeal. The tax disappears in 2024.
Franchise taxes differ widely from state to state.
- Delaware businesses pay a minimum of $175 in franchise tax, although the amount may be more depending on the corporation’s circumstances.
- Every year, Delaware limited liability firms and limited partnerships pay a $300 franchise tax.
- Businesses in California must pay an annual franchise tax of $800.