Tax Rate

Tax Rate for General Business Corporations

The franchise tax rate is one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) and is applied as set forth in the law. For tax years beginning on or after January 1, 2017, the minimum franchise tax is two hundred dollars ($200). For tax years beginning prior to January 1, 2017, the minimum franchise tax was thirty-five dollars ($35).

Tax Rate for Holding Companies

The basis of the tax for a holding company as defined in G.S. 105-120.2(c) is the same as for general business corporations. The minimum franchise tax is also the same. However, the maximum amount of franchise tax due by a holding company on its net worth tax base (formally the capital stock, surplus, and undivided profits tax base) is capped.

For tax years beginning on or after January 1, 2017, franchise tax payable by a qualified holding company on its net worth tax base is limited to an amount not to exceed one hundred and fifty thousand dollars ($150,000). For tax years beginning prior to January 1, 2017, franchise tax payable by a qualified holding company on its capital stock, surplus, and undivided profits tax base was limited to an amount not to exceed seventy-five thousand dollars ($75,000).

Any corporation that qualifies as a holding company for franchise tax should fill in the circle next to Line 1 on Page 1 of the appropriate form, CD-405 or CD-401S. There is no limitation on the amount of franchise tax payable where the tax produced by the investment in tangible property or appraised value of property exceed the tax produced by the net worth tax base (formally the capital stock, surplus, and undivided profits tax base).