Texas franchise tax is zero at $2.65 million of revenue or less for 2026 and 2027 reports, but your LLC still files a report.
Texas charges franchise tax to LLCs, corporations and most other business entities formed or doing business there. The no-tax-due threshold of $2,650,000 in total revenue applies to reports due in 2026 and 2027. Above it, the tax is figured on margin, meaning revenue after one of four deductions, or on revenue alone under the EZ computation.
Updated · Sources
Reports due in 2026 and 2027
- 0.75%
- of taxable margin is the standard rate once tax is due. Businesses primarily engaged in retail or wholesale trade pay 0.375%.
- 0.331%
- of the Texas share of revenue is the EZ computation rate, for businesses with up to $20 million in revenue.
- May 15
- is the due date each year for the annual franchise tax report and the information report. A weekend or holiday moves it to the next business day.
Texas requires no estimated payments during the year. The threshold is adjusted every two years, next for reports due in 2028.
Does your business have to pay franchise tax in Texas?
A business pays Texas franchise tax only if all four of these are true. The first two tests decide whether it must file at all. Passive entities and new veteran-owned businesses have their own rules.
An LLC, corporation or other taxable entity
Corporations, LLCs, limited partnerships, limited liability partnerships and professional associations are taxable entities, and so are business trusts. A sole proprietorship is not, and neither is a general partnership owned directly by individuals.
Formed in Texas, or doing business there
An entity formed in Texas is subject to the tax wherever its owners live. One formed elsewhere is subject once it does business in Texas, such as through employees or property there. It also counts as doing business there once it has $500,000 or more of Texas gross receipts in a tax year.
More than $2,650,000 in total revenue
The threshold is measured on total revenue from the entire business, including revenue earned outside Texas. Profit does not matter, so a business that loses money can still be over it.
A tax of $1,000 or more
If the tax works out to less than $1,000, the business owes nothing, and Texas has no minimum tax. It still files its franchise tax report and its information report.
A new Texas business owned entirely by honorably discharged veterans owes no tax and files no reports for up to five years. Each owner must provide verification of their veteran status. The business must have started doing business in Texas on or after January 1, 2022. A 2025 law removed the program’s end date.
Calculated five ways, a service LLC’s Texas franchise tax on $3 million of revenue is lowest under EZ, at $9,930.
Revenue minus cost of goods sold
$22,500
With no cost of goods sold, the margin is the full $3,000,000.
70% of revenue
$15,750
The margin is $2,100,000.
Revenue minus $1 million
$15,000
The margin is $2,000,000.
Revenue minus compensation
$13,500
The margin is $1,800,000, the lowest of the four.
EZ computation
$9,930
The EZ computation taxes all $3,000,000 of revenue, with no deductions.
The long form taxes the lowest margin at 0.75%. The EZ computation taxes revenue at 0.331%. All receipts are from Texas, so the whole margin and all revenue are apportioned to Texas. Compensation counts each person’s wages up to $480,000, plus benefits. No one here earns more. The LLC elects EZ and pays $9,930 with its report by May 17, 2027.
Which Texas franchise tax report do you file, and when?
Texas calls the franchise tax return a report. In 2027, May 15 falls on a Saturday, so reports are due Monday, May 17.
| $2.65M or less | Above $2.65M | |
|---|---|---|
| Franchise tax report | None The No Tax Due Report was discontinued in 2024 | EZ or long form The EZ report is Form 05-169 |
| Information report | Required Form 05-102 or 05-167 | Required Filed with the franchise tax report |
| Tax | None | Paid with the report |
| Late filing | $50 per report | $50 per report Plus 5% of any tax paid late, or 10% after 30 days |
Corporations, LLCs, limited partnerships and professional associations file the Public Information Report, Form 05-102. Other taxable entities, such as a general partnership with a company as a partner, file the Ownership Information Report, Form 05-167. A passive entity, or one with no Texas gross receipts, still files an EZ or long form report, even under the threshold. You can file every one of these reports, and request an extension, online through the Comptroller’s Webfile system. Webfile asks for your 11-digit Texas taxpayer number and the 6-digit Webfile number on your franchise tax notice. On paper, the extension request is Form 05-164. The Comptroller’s 2026 instructions for these reports are Form 05-915.
What can a late or wrong Texas franchise tax filing cost you?
A missed report can cost the right to transact business in Texas
If a report is still missing 45 days after the Comptroller’s notice, the Comptroller can forfeit the entity’s right to transact business in Texas. Its officers and directors can then be personally liable for Texas debts it incurs from the missed due date until the right is restored. After another 120 days, the Texas Secretary of State can forfeit its charter or registration.
A single-member LLC is still a taxable entity
Texas taxes an LLC by how it was formed, so a single-member LLC files its own franchise tax report. The exception is an LLC in a combined group, which the group lists on its Affiliate Schedule.
A short first year can push you over the threshold
For a report covering less than 12 months, revenue is annualized: divided by the days in the period, then multiplied by 365. In the Comptroller’s example, $800,000 of revenue over 108 days annualizes to about $2.7 million, which is over the threshold. The tax itself is then figured on the $800,000.
An extension needs a payment by the due date
To extend to November 15, pay at least 90% of this year’s tax by the original due date. Paying 100% of last year’s tax also works if last year’s report was filed by May 14, but not for a first annual report. A business paying by electronic funds transfer first extends to August 15. It reaches November 15 by paying the rest of its tax by August 15.
The EZ computation is not always cheaper
For a retailer or wholesaler at the 0.375% rate, the EZ computation always costs more than the long form. A retailer with $5,000,000 of Texas revenue and $4,000,000 of cost of goods sold owes $3,750 on the long form, or $16,550 under EZ. Other businesses pay more under EZ when cost of goods sold or pay is a large share of revenue.
Closing the business can take a final report
A Texas entity generally cannot end its legal existence until its franchise tax is settled. Above the threshold, a business that stops doing business in Texas files a final report and pays any tax within 60 days. A business at or below the threshold files none, but confirms it is under the threshold when requesting a certificate of account status.
Valim works out your Texas franchise tax both ways and files the report that costs less.
Valim’s CPAs prepare your Texas franchise tax reports along with your federal return.
- We check your revenue against the threshold each year, then prepare your information report and any franchise tax report due.
- Above the threshold, we compare the EZ computation with each margin option, counting any credits EZ would give up.
- We take your revenue, cost of goods sold and compensation from the year-end figures your bookkeeper sends.
- If you need more time, we calculate the payment that keeps a November 15 extension valid.
- If the Comptroller or the IRS sends a notice on a return we prepared, we handle it as part of your fee.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
Texas franchise tax questions.
What is the franchise tax in Texas?
The Texas franchise tax is a privilege tax on LLCs, corporations and other taxable entities formed in Texas or doing business there. Its base is usually margin, the lowest of four figures worked out from revenue. A business with up to $20 million of revenue can instead elect the EZ computation, which taxes revenue alone. For reports due in 2026 and 2027, no tax is due on total revenue of $2,650,000 or less. An LLC or corporation that owes nothing generally still files an information report with the Texas Comptroller by May 15.
Who is required to pay Texas franchise tax?
Taxable entities formed in Texas or doing business there pay Texas franchise tax once their total revenue passes $2,650,000 for 2026 and 2027 reports. Taxable entities include corporations, LLCs, limited partnerships, limited liability partnerships and professional associations. Sole proprietors and general partnerships owned directly by individuals are not taxable entities. Passive entities under Tax Code § 171.0003 owe no tax, and neither do new veteran-owned businesses in their first five years.
How much is the Texas LLC franchise tax?
A Texas LLC owes no franchise tax on total revenue of $2,650,000 or less, for reports due in 2026 and 2027. Above that, it owes 0.75% of its taxable margin, or 0.375% if it is primarily engaged in retail or wholesale trade. Margin is the lowest of 70% of revenue, revenue minus $1 million, revenue minus cost of goods sold, or revenue minus compensation. With up to $20 million of revenue, an LLC can elect the EZ computation instead: 0.331% of its revenue apportioned to Texas. An LLC whose tax comes to less than $1,000 pays nothing, while California charges its annual LLC tax at any level of revenue.
Do LLCs pay franchise tax in Texas?
Yes. LLCs, including single-member and series LLCs, pay Texas franchise tax once their total revenue passes $2,650,000 for 2026 and 2027 reports. At or below that, an LLC owes nothing but still files a Public Information Report by May 15. A single-member LLC is taxed the same way as any other LLC. A late report costs $50, even with no tax due.
What is the no-tax-due threshold?
The no-tax-due threshold is the most annualized total revenue a Texas taxable entity can have and still owe no franchise tax. For reports due in 2026 and 2027, it is $2,650,000, counting revenue from the entire business. It was $2,470,000 for 2024 and 2025 reports, and $1,230,000 for 2022 and 2023. An entity at or below the threshold generally files only a Public Information Report or an Ownership Information Report.
Sources
- Texas Tax Code ch. 171, Franchise tax
- Texas Comptroller, 2026 Texas Franchise Tax Report instructions (Form 05-915)
- Texas Comptroller of Public Accounts, Franchise tax
- Texas Comptroller, No tax due reporting for report year 2024 and later
- Texas Comptroller, Requirements for reporting and paying franchise tax
- Texas Comptroller, Franchise tax extensions of time to file
- Texas Comptroller, Franchise tax FAQs: taxable entities
- Texas Comptroller, Publication 98-806, Franchise Tax Overview
- 34 Tex. Admin. Code § 3.586, Margin: Nexus
- Texas H.B. 346 (2025), franchise tax exemption for veteran-owned businesses
Reviewed and updated September 2026. General information, not advice for your situation.