Updated September 4, 2026. Quick answer: North Carolina’s franchise tax reaches an S-corp because it remains a corporation under state law, at least $200 a year and more as its tax base grows, while a default LLC or partnership owes none of it.
Does this state require its own election
No separate North Carolina filing exists to obtain S-corp status; the federal election controls. North Carolina automatically follows the federal S election with no separate state filing.
“all active and inactive domestic corporations, and all foreign corporations with a Certificate of Authority to do business, or which are in fact doing business in this state, are subject to the annual franchise tax”
North Carolina Department of Revenue, Corporate Income and Franchise Tax filing requirements
What it costs at the entity level
North Carolina’s franchise tax applies to corporations, a category that includes S-corps because they remain corporations under state law even though S-corp income passes through for income-tax purposes; a non-corporate LLC or partnership that has not elected corporate treatment is not subject to it.
| What North Carolina charges | Figure |
|---|---|
| Rate | $1.50 per $1,000 of tax base above $1,000,000 |
| Minimum | $200.00 for the first $1,000,000 of tax base, and never less than $200 regardless of size |
“the tax rate is two hundred dollars ($200.00) for the first one million dollars ($1,000,000) of the corporation’s tax base … and one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) of its tax base that exceeds one million dollars ($1,000,000). In no event may the tax imposed by this section be less than two hundred dollars ($200.00).”
N.C. Gen. Stat. § 105-122
The comparison against a plain LLC
An S-corp’s franchise-tax minimum, $200, is an annual floor an LLC never pays; the bill only grows from there as the entity’s tax base rises above $1,000,000.
What this does not model
This page does not model the franchise-tax base calculation itself (net worth, investment in NC tangible property, or appraised property value, whichever is greatest); only the rate applied to that base once determined.
No federal tax modelling is repeated here; see the federal S-corp election calculator for the payroll-tax and QBI mechanics this page assumes but does not recompute. No personal North Carolina income tax on the pass-through income itself is modelled either.
Sources
Every figure on this page is read from the text quoted above, fetched directly from the state’s own site or code, as read on September 4, 2026.
| What it establishes | Source |
|---|---|
| Whether North Carolina requires its own S-corp election | North Carolina Department of Revenue, Corporate Income and Franchise Tax filing requirements |
| What North Carolina charges an S-corp at the entity level | N.C. Gen. Stat. § 105-122 |
General consumer information, not financial, tax or legal advice. State rules are as published by the cited source on September 4, 2026 and change; your own facts govern, and an S-corporation election is a decision to take with a tax professional who has seen your books.