Texas Franchise Tax: Who Has to File and What's Due May 15
Texas has no personal income tax, but most LLCs and corporations still have a yearly filing with the Texas Comptroller. Missing it can cost your company its right to do business in the state. Here's what to know.
By the Enrolled Agents and CPAs at A&W Tax Services · Updated
Who has to file
The franchise tax applies to entities with liability protection that do business in Texas, including LLCs, corporations, limited partnerships and professional associations, even if the LLC has only one owner or is taxed as an S corp by the IRS.
Sole proprietors and general partnerships owned directly by individuals don't file.
The no-tax-due threshold
Most small businesses owe no franchise tax. If your total revenue is at or below the no-tax-due threshold, no tax is due. The Comptroller adjusts the threshold every two years; it was $2.47 million for reports due in 2024 and 2025. Businesses above it generally pay 0.75% of taxable margin (0.375% for retailers and wholesalers), or can use the simpler EZ computation if revenue is $20 million or less.
The information report you still owe
Since 2024, businesses under the threshold no longer file a No Tax Due Report, but they still must file an information report every year: the Public Information Report for corporations and LLCs, or the Ownership Information Report for other entities. Skipping it has the same consequences as not filing at all.
Deadlines
- Annual reports are due May 15
- An extension can be requested on or before May 15
- A new business's first report is due the year after it forms or registers in Texas
Penalties for missing it
A late report costs a $50 penalty, plus penalties and interest on any tax owed. If the report stays unfiled, the Comptroller can forfeit the entity's right to transact business in Texas, which means it can't sue or defend itself in Texas courts, and owners can become personally liable for certain company debts.
Keeping it simple
Franchise tax reports are based on the same revenue and expense figures as your federal return, so the easiest way to stay on time is to handle them together. Clean bookkeeping during the year makes both filings faster and more accurate.