Franchise Tax

Alabama Franchise Tax Information

Alabama doesn’t have a Franchise Tax, but does have a Business Privilege Tax that closely resembles a Franchise Tax in other states. It is typically filed by an accountant given the detailed financial information required. As of 2024, Alabama Annual Reports are due separately with the Secretary of State.

The Business Privilege Tax applies to Foreign Corporations, limited liability entities, and disregarded entities that have qualified to do business in Alabama with the Secretary of State. It is separate to Alabama Corporate Income Taxes.

There are two main filings:

  1. An Initial Business Privilege Tax Return, due within two and one-half months after date of qualification
  2. A separate Business Privilege Tax Return, filed annually

When is the Business Privilege Tax Return due?

The annual Business Privilege Tax Return is due the same day as the company’s Federal Tax Returns.

How is the Business Privilege Tax due calculated?

The tax is calculated based on net worth with some adjustments, multiplied by the “apportionment factor”, less deductions.

Both the Initial Business Privilege Tax Return and the Business Privilege Tax Return have detailed forms and instructions to help your accountant calculate tax due.

For the taxable year 2024, taxpayers who would be subject to the minimum tax of one hundred dollars ($100), do not have a filing requirement.

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