Does Florida have a franchise tax?

Florida does not charge a franchise tax to businesses, as is consistent with the state's business-friendly tax system. In place of a franchise tax, Florida charges a corporate income tax that applies to specified business entities.

The Florida corporate income tax rate is 5.5% of the net income of corporations and other business entities doing business in Florida and subject to filing federal income tax returns as corporations. This applies to traditional C-corporations. S-corporations do not typically pay this tax unless federal income tax is due. Limited liability companies (LLCs), partnerships, and sole proprietorships are usually exempt from the corporate income tax unless they elect to be treated as a corporation for tax purposes.

The absence of a franchise tax in Florida is appealing to most business people and makes the state a preferred place for conducting business. The corporate income tax system is simple and competitive with other states that may impose both an income tax and a franchise tax.

It offers no franchise tax, as well as no personal income tax, which adds a further boost of appeal to it for businesses as well as residents. This alone can save large amounts of money for business people and employees and is a point of attraction that makes it inviting for both commencing and ongoing business.

Businesses in Florida are still subject to other types of taxes, such as sales and use taxes, unemployment taxes, and property taxes. Companies considering establishing or expanding their presence in Florida should consult with tax professionals to fully understand their tax obligations and potential incentives.