Check the entity, not just its federal return.
Texas franchise tax generally applies to taxable entities formed in Texas or doing business here, including LLCs and corporations. A single-member LLC may be disregarded for federal income-tax purposes and still be a taxable entity for Texas franchise tax.
Sole proprietorships, other than single-member LLCs, and certain general partnerships owned entirely by natural persons are among the exclusions. Exempt and special entity categories have separate rules.
Official source: Franchise tax overview ↗
Use the right year’s numbers.
| 2026 & 2027 report years | Amount / rate |
|---|---|
| No-tax-due threshold | $2,650,000 |
| Qualifying retail or wholesale rate | 0.375% |
| Other business rate | 0.75% |
| EZ computation revenue ceiling | $20 million |
| EZ computation rate | 0.331% |
| Compensation deduction limit per person | $480,000 |
The annual due date is May 15, moving to the next business day when it falls on a weekend or holiday. A report year is not necessarily the year in which the income was earned. Use that report’s instructions to identify the accounting period.
The no-tax-due threshold is based on annualized total revenue for the report year, not simply cash received during the calendar year. Combined groups apply the threshold and computation rules at group level and should follow the combined-report instructions.
These rates are not a simple tax on every business’s gross receipts. Margin calculations, apportionment, eligibility and other rules affect the result. Confirm every figure against the instructions for the exact report year that applies.
Official source: Rates, thresholds and due dates ↗
No tax due can still mean paperwork.
For report years 2024 onward, an entity at or below the annualized total-revenue threshold generally does not file the discontinued No Tax Due Report. It still needs the applicable Public Information Report (PIR) or Ownership Information Report (OIR).
A small Texas LLC
A Texas LLC with $180,000 of annualized total revenue for the applicable period is below the 2026 threshold. Assuming no special circumstances, it owes no franchise tax, but must still submit its PIR. “Nothing to pay” does not mean “nothing to file.”
Exceptions exist, including qualifying new veteran-owned businesses during their initial exemption period. Check the official guidance if your entity has a special status.
Official source: No-tax-due reporting requirements ↗
Gather, check, submit, save.
- Confirm the report year and accounting period.
- Gather the Texas taxpayer number and account access details.
- Prepare revenue records and any information needed for the applicable computation.
- Check ownership, management and registered-office information for the information report.
- If revenue exceeds the threshold, review the long-form and EZ computation instructions before selecting a method.
- Save the submission confirmation and any payment record.
Already late or responding to a notice? Check the account’s outstanding requirements instead of assuming a later filing fixes an earlier year. Use the Comptroller’s account-status and account-resolution tools.
Official source: Franchise tax account status ↗