US State Income, Franchise and Gross Receipts Tax Support
Each US state sets its own business tax. Most levy a corporate income or franchise tax, a few use gross receipts taxes instead, and you file wherever you have nexus, which can arise from employees, property or sales into the state.
Implemented by ERPHUBs · United StatesFifty states, fifty rule books
State business taxes differ in base, rate, due date and form. Delaware charges a franchise tax and annual report, Texas a margin tax, Washington a business and occupation tax, and California a minimum annual franchise tax plus an LLC fee based on gross receipts.
We track where your business has people, property and sales, tag transactions by state in Zoho Books, and prepare the workpapers your CPA needs for each state return and annual report.
Key rules at a glance
- Nexus: Physical presence (staff, inventory, offices) or economic activity in a state can create filing duties.
- Delaware: Corporate franchise tax and annual report due 1 March; LLCs pay a flat annual tax.
- California: $800 minimum franchise tax for most LLCs and corporations, plus LLC fee tiers.
- Texas: Franchise (margin) tax with annual report, generally due 15 May.
- Washington / Ohio: Gross receipts style taxes (B&O, CAT) instead of income tax.
- No corporate income tax: Some states, such as Nevada, South Dakota and Wyoming, do not levy one, though other taxes may apply.
State Income & Franchise Tax: scope of service
Nexus mapping
Revenue, headcount and property by state.
Registration
Foreign qualification and state tax account set-up.
Annual reports
Secretary of State reports and franchise tax calendars.
Apportionment
Sales, payroll and property factors from your ledger.
Estimated payments
State instalments tracked beside federal ones.
Workpapers
State-by-state package for your CPA.
United States compliance calendar
Dates shown are the general statutory dates; they move with your year-end, entity type and any extension.
1 March
Delaware annual report and franchise tax (corporations).
15 April
Many state returns for calendar-year C corporations and extended pass-through returns.
15 May
Texas franchise tax report.
Quarterly
State estimated tax instalments where required.
Varies
State pass-through entity tax elections and composite returns.
Set-up in Zoho Books
- Add a "state" tag to invoices, bills and payroll in Zoho Books.
- Keep a nexus register updated each quarter.
- Store registration numbers and filing frequencies per state.
- Calendar annual reports separate from tax returns.
- Review apportionment factors before the return season.
What we watch for
- Unfiled returns in states where remote staff created nexus.
- Confusing a state annual report with the tax return.
- Assuming a state with no income tax has no business tax.
- Missing pass-through entity tax elections.
State Income & Franchise Tax: common questions
Not always. Filing duties depend on nexus and on the type of tax; economic nexus thresholds apply mostly to sales tax, while income tax nexus often turns on presence or activity.
A tax for the privilege of operating in a state, calculated on capital, net worth or margin rather than purely on profit.
Often yes, through flat fees, franchise taxes or by passing income to members who pay personal state income tax; rules differ by state.
A licensed CPA or authorised officer. We prepare the books and schedules.
General guidance for United States, last reviewed 2026-10-16; it is not tax advice. Rates, thresholds and dates change, so confirm with a qualified local adviser. Official sources: Federation of Tax Administrators · IRS
A practical guide for United States businesses
Income tax, franchise tax and gross receipts tax are different things
Many founders assume a state tax means an income tax. In practice, states use several bases. Corporate income tax is levied on profit. Franchise tax is levied on the privilege of being organised or doing business in the state and may be based on capital, shares or a flat fee. Gross receipts and margin taxes apply to revenue, with limited or no deduction for costs, so a company can owe tax even in a loss year.
A Delaware corporation therefore deals with a franchise tax and annual report, a Texas company with a margin tax, and a company registered in California with a minimum annual franchise tax and an LLC fee that scales with revenue. Knowing which of these applies, and when, is more useful than any single rate.
Nexus, apportionment and where profit is taxed
Once you have a filing duty in more than one state, income is split between them using an apportionment formula. Many states weight the sales factor heavily, which means that where your customers are matters more than where your staff sit. A remote employee in a new state can quietly create a filing duty, a payroll registration and a state unemployment account at the same time.
We maintain a state register showing, for each state, the registration number, entity filing type, tax base, due dates and whether the entity has an active duty. Revenue, headcount and property are tagged in Zoho Books so apportionment data can be pulled in minutes.
- Review nexus each quarter, not once a year
- Separate annual report from tax return in your calendar
- Check whether a pass-through entity tax election is available and beneficial
- Keep foreign qualification current in every state where you operate
Annual reports and good standing
An annual report or statement of information is a corporate filing, not a tax return, but missing it can cost the entity its good standing, which in turn can block banking, financing or a sale. Some states pair the report with a fee or the franchise tax payment.
We calendar each report, track the registered agent, and make sure the state account details on file are current. If an entity has lapsed, we help assemble what is needed to reinstate it.
Examples of how states tax business activity
| State | Typical base | Reminder |
|---|---|---|
| Delaware | Franchise tax and annual report | Due 1 March for corporations |
| Texas | Margin tax on revenue | Annual report due 15 May |
| California | Franchise tax with minimum, plus LLC fee | Minimum due in the first year even without income |
| Washington | Business and occupation tax on gross receipts | Filed by revenue class, often monthly or quarterly |
More questions about this topic in United States
A state without an individual income tax may still tax business activity through franchise, gross receipts or other taxes. Check each state in which you operate.
Often yes. An employee working in a state can create income tax, payroll tax and registration duties there. We recommend reviewing the position before the first paycheck.
No. An annual report keeps the entity in good standing. A tax return reports taxable activity. Some states require both and some link them.
Yes. We reconstruct the books, quantify exposure by state and help your adviser decide whether to use a voluntary disclosure programme.
This guide is general information based on published United States rules and is not legal or tax advice. Rates, thresholds and due dates change; confirm current figures with the tax authority or your adviser.
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