Legal Definitions - license tax

A license tax is a fee charged by a government for the privilege of pursuing a specific occupation, business, or activity. It may also come with regulations or restrictions that the licensee must follow.

• A hairdresser may need to pay a license tax to the government in order to legally cut and style hair.
• A restaurant owner may need to pay a license tax to the government in order to legally serve food to customers.
• A taxi driver may need to pay a license tax to the government in order to legally transport passengers.

These examples illustrate how a license tax is a fee charged by the government for the privilege of pursuing a specific occupation or business. Without paying the license tax, the individual or business may not be able to legally operate in their field.