A Privilege Tax is a tax levied in some states for the Privilege of doing business in that state.  Privilege Tax rates vary widely from state to state.  States with high corporate income taxes usually have low or no Privilege Tax and states with low corporate income taxes tend to have some kind of Privilege Tax.

Some states refer to the Privilege Tax by another name.  For example, California calls it a Franchise Tax.  In Hawaii the Privilege Tax is called an Excise Tax.

Another example of a Privilege Tax is the fee for registering a motor vehicle.