Effective for tax years beginning after December 31, 2006, banks have the option of using an “Alternative Franchise Tax”. The Alternative Franchise Tax has two parts:
A traditional income tax employing three-factor apportionment with a double-weighted receipts factor. The tax’s regressive rates range from 7.0% on taxable income not in excess of $50 million to 0.5% on taxable income in excess of $1.3 billion.
A “Location Benefit Tax” based on net assets. The minimum tax is $1.6 million with additional liability ranging from 0.012% on the value of net assets not in excess of $5.0 billion to 0.004% on net assets in excess of $20 billion but not in excess of $90 billion. The maximum Location Benefit Tax is $6.2 million.
Not greater than $20 million — 8.7%
$20 million to $25 million — 6.7%
$25 million to $30 million — 4.7%
$30 million to $650 million — 2.7%
Greater than $650 million — 1.7%
The rate of tax on an elective income tax base as calculated under the alternative franchise tax:
Taxable Income Range –Tax Rate
Not greater than $50 million — 7.0%
$50 million to $100 million — 5.0%
$100 million to $500 million — 3.0%
$500 million to $1.3 billion — 1.0%
Greater than $1.3 billion — 0.5%
The rate of tax on the value of net assets as calculated under the location benefit tax:
Value of Assets — Tax Rate
$1.6 million (minimum) plus
First $5 billion — 0.012%
Next $15 billion — 0.008%
Next $70 billion — 0.004%
Amount Collected (In Millions)
Related Topics: Bank Commissioner, Bank Franchise Tax, Office of the State Bank Commissioner, Tax Collections