Franchise Tax Overview
The franchise tax applies solely to corporations. LLCs are exempt. Corporations pay $1.25 per $1,000 of capital allocated in Oklahoma, up to $20,000. Corporations owe $100 if no tax due. This tax has been repealed, so it will not apply beginning 2024. However, it was in effect in 2022 and 2023.
For 2023, franchise tax returns are due July 1. They are delinquent if not remitted by September 15, 2024. Corporations that pay the maximum must file by May 1. Others can file by July 1. An election allows filing with the corporate return.
LLC Taxation
LLCs don’t pay federal income taxes. Owners report profits/losses on individual returns. In Oklahoma, LLCs are pass-through entities. Single-member LLCs are disregarded entities. Taxes are reported on the owner’s Form 1040. Multi-member LLCs are partnerships. Members report shares on individual returns.
The franchise tax is imposed for having a physical presence in Oklahoma. Only corporations exceeding $201,000 of capital pay it. File your balance sheet and schedules B, C and D. State insurance, franchises, and intellectual property assets. Include your FEIN. State officers’ names and contact information. Pay by July 1 unless a Form 200-F was filed. Then pay before September 15.
LLCs with C-corp status pay 21% federal and 4% state tax on earnings. Owners pay individual taxes on distributions. In addition, owners pay employment taxes if taking a salary. Newly formed LLCs must pay the no franchise tax fee the first year. File through the Tax Commission website or mail payment vouchers. The annual report filing fee is $25, due by the end of the formation month.
Tax Changes and Clarifications
The Oklahoma Legislature passed HB 1039 repealing the franchise tax beginning for tax year 2024. The state collected $64.2 million from the franchise tax in FY 2022, accounting for roughly 0.5 percent of total state tax revenue.
A franchise tax is not a tax on a franchise business but a fee that the state imposes on registered business entities for the right to operate. Oklahoma charges an annual franchise tax rate of $1.25 per $1,000.
Companies that pay the Oklahoma franchise tax are charged $1.25 for each $1,000 of capital the business invests or uses in the state, with a maximum tax liability of $20,000. Foreign corporations pay an additional $100 fee each year.
All members of an LLC in Oklahoma are required to pay self-employment tax at the rate of 15.3%. Some LLCs pay Oklahoma sales tax on $100,000 worth of taxable merchandise.
Oklahoma LLCs are also required to file an Annual Certificate each year, the fee for which is $25.
Oklahoma State Taxes. All US states have their own laws and regulations associated with how they tax businesses and individuals. Below you’ll find information on the most important state taxes Oklahoma LLCs need to know about.
An LLC in Oklahoma can be dissolved or canceled by filing the necessary forms with the Oklahoma Secretary of State and paying any necessary fees.
By default, LLCs themselves do not pay income taxes, only their members do.
The State of Oklahoma, like almost every other state, has a corporation income tax. In Oklahoma, the corporate tax is a flat 6% of Oklahoma taxable income. If your LLC is taxed as a corporation you’ll need to pay this tax.