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Last reviewed: September 23, 2026
The Texas franchise tax is an annual privilege tax on LLCs, corporations, limited partnerships, and most other registered entities formed or doing business in Texas, and for reports due in 2026 and 2027 a business owes $0 when its annualized total revenue is $2,650,000 or less. Above that line the tax is 0.75% of taxable margin (0.375% for qualifying retailers and wholesalers), or 0.331% of revenue under the EZ Computation for businesses with revenue of $20 million or less. The 2026 report was due May 15, 2026, with extensions running to November 16, 2026; the 2027 report is due Monday, May 17, 2027. Even at $0 tax, every LLC still files a Public Information Report.
Every number here was read from the Texas Comptroller's franchise tax pages and the 2026 instructions booklet (Form 05-915) on September 22, 2026. Texas names each report after the year it is due: the 2026 report covers your accounting period that ended in 2025, and the 2027 report will cover 2026.
Key takeaways:
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The Texas franchise tax is a privilege tax that the Texas Comptroller of Public Accounts imposes on each taxable entity formed, organized, or doing business in Texas under Chapter 171 of the Texas Tax Code. It is not an income tax. The base is "margin," a figure derived from total revenue, so a company that broke even or lost money can still owe it once revenue clears the threshold.
Taxable entities, per the Comptroller's franchise tax overview and the 2026 instructions, include corporations (S corporations too), LLCs including single-member and series LLCs, limited partnerships and limited liability partnerships, professional associations, business trusts, joint ventures, and banks. The tax is not imposed on sole proprietorships, general partnerships whose direct owners are all natural persons, certain grantor trusts and estates, qualifying REITs, or entities holding a Comptroller-granted exemption.
Federal classification is irrelevant. The Comptroller's taxable-entities page states that a single-member LLC filing as a sole proprietor for federal income tax "is a taxable entity," because legal formation, not federal treatment, decides who files. Out-of-state entities doing business in Texas file too.
A partnership or trust (never an LLC) qualifies as a passive entity when at least 90% of its federal gross income comes from sources such as dividends, interest, and income from a limited liability company; a registered passive entity files Form 05-158 or 05-169 only to mark the passive-entity circle and skips the PIR and OIR. A pre-qualified new veteran-owned business owes no tax and files no information report for its first five years.
The no-tax-due threshold is $2,650,000 of annualized total revenue for reports originally due in 2026 and 2027, per the Comptroller's rates and thresholds table. An entity at or below that amount owes no franchise tax and files no tax report. The threshold is indexed for inflation every two years under Texas Tax Code Section 171.006(b).
"Annualized" matters when your accounting period is shorter than 12 months. The Comptroller's own example in the 05-915 booklet: an entity whose 2026 report covers September 15 through December 31, 2025 (108 days) with $800,000 of revenue has annualized total revenue of $2,703,703.70 ($800,000 ÷ 108 × 365). That entity is over the threshold and files a tax report, even though it reports the actual $800,000 as total revenue.
The threshold for 2025 reports (covering 2024 activity) was $2,470,000, the same figure that applied to 2024 reports. If you are catching up on a late 2025 report, test annualized revenue against $2,470,000, not $2,650,000, and use the 2025 forms. The jump to $2,650,000 applies to reports originally due on or after January 1, 2026.
| Report year | Activity year covered | No-tax-due threshold | Compensation deduction cap |
|---|---|---|---|
| 2024 and 2025 | 2023 and 2024 | $2,470,000 | $450,000 per person |
| 2026 and 2027 | 2025 and 2026 | $2,650,000 | $480,000 per person |
Texas discontinued the No Tax Due Report (Form 05-163) starting with 2024 reports, per the Comptroller's no-tax-due reporting update. An entity under the threshold now files exactly one thing by the due date:
Both list the entity's officers, directors, members, managers, or owners, and both become public record. An officer, director, or other authorized person signs the PIR; a partner, member, or owner signs the OIR. Entities above the threshold attach the same report to their tax report. The PIR and OIR requirements page is explicit that failing to file leads to forfeiture even when no tax is due.
Two edge cases. An entity with zero Texas gross receipts (typically an out-of-state entity registered here) still files an EZ or long-form report showing zero receipts, plus its PIR or OIR. And there is no minimum tax: computed tax under $1,000 is not paid, but the tax report is still filed.
Interactive
What will your 2026 Texas franchise tax report cost?
Enter annualized total revenue, your rate class, and cost of goods sold if you sell goods. The tool tests the threshold, then compares the long-form margin methods against the EZ Computation.
Short period? Divide revenue by days in the period and multiply by 365.
Only businesses that sell or produce goods may deduct COGS. Leave at 0 for services.
Lowest tax on these numbers
$10,261
The EZ Computation (Form 05-169) beats the long form by $5,489 here. It gives up every credit for the year, so check that trade-off before filing.
2026 and 2027 report figures from the Texas Comptroller: $2,650,000 no-tax-due threshold, 0.75% and 0.375% rates on taxable margin, 0.331% EZ rate for revenue of $20 million or less, no payment when tax is under $1,000. Assumes 100% Texas apportionment and a 12-month accounting period. Excludes the compensation method, tax credits, and combined groups; the $1 million subtraction can never push margin below zero.
Open the full Texas franchise tax pageAbove the threshold, Texas taxes your taxable margin at one of two rates, or your revenue at a third rate if you choose the EZ Computation:
| Computation | Rate | Who can use it |
|---|---|---|
| Long form, most entities | 0.75% of taxable margin | Any taxable entity |
| Long form, qualifying retail or wholesale | 0.375% of taxable margin | Entities primarily engaged in retail or wholesale trade (Divisions F and G of the 1987 SIC Manual, plus listed rental and repair activities) |
| EZ Computation (Form 05-169) | 0.331% of apportioned total revenue | Annualized total revenue of $20 million or less |
Margin is total revenue minus the largest of four subtractions, and you pick whichever produces the lowest margin (2026 instructions, page 4):
Margin is then apportioned to Texas with a single-factor formula, Texas gross receipts divided by gross receipts everywhere; a business with only Texas customers apportions 100%.
The EZ Computation skips all of that. You multiply apportioned revenue by 0.331%, but you give up every margin deduction and every credit for that report year. Because the rate is lower and the base is bigger, EZ is cheaper for some businesses and far more expensive for others, which is why the worked example runs both.
One 2026 change for goods producers: amounts pulled from the federal return now follow current federal law instead of the 2007 Internal Revenue Code, so bonus depreciation claimed federally can be included in Texas COGS, with a one-time catch-up adjustment for assets necessary for the production of goods.
Beatriz runs an Austin marketing agency organized as a Texas LLC. Her 2025 revenue was $3,100,000, all from Texas clients, with no cost of goods sold (a services business cannot use COGS). She is above the $2,650,000 threshold, so her 2026 report is a tax report, not just a PIR.
| Step | Amount |
|---|---|
| Margin, 70% of revenue | $2,170,000 |
| Margin, revenue minus $1,000,000 | $2,100,000 (lowest) |
| Long-form tax, 0.75% × $2,100,000 | $15,750 |
| EZ Computation, 0.331% × $3,100,000 | $10,261 |
The $1 million subtraction beats the 70% method by $70,000 of margin, which saves $525 of tax. But the EZ report beats the long form by $5,489, because on a $3.1 million services business no deduction shrinks the margin enough to offset the higher rate. Beatriz files Form 05-169 with her PIR, unless she has credits to claim or her qualifying compensation exceeds roughly $1.73 million, the point at which the compensation method produces a long-form tax below $10,261.
Below the threshold, in one line: an LLC with $1,400,000 of revenue owes no tax, files no tax report, and submits only Form 05-102 through Webfile by May 15.
Texas franchise tax reports are due May 15 each year, or the next business day when May 15 falls on a weekend or legal holiday. The accounting period is your last federal accounting period that ended in the prior calendar year, so a calendar-year LLC's 2026 report covers January 1 through December 31, 2025.
The 2026 report was due Friday, May 15, 2026. If you requested an extension by that date, the Comptroller's extension rules and the 2026 instructions give two tracks:
| Filer | Original due date | Extended due date | What the request had to include |
|---|---|---|---|
| Non-EFT filers (most small businesses) | May 15, 2026 | November 16, 2026 (November 15 is a Sunday) | At least 90% of the tax due with the 2026 report, or 100% of the tax on the 2025 report (if that report was filed by May 14, 2026) |
| Mandatory EFT payers ($10,000 or more of franchise tax paid in the prior state fiscal year) | May 15, 2026 | August 17, 2026, then November 16, 2026 with a second request | The same 90% or 100% payment by May 15; the balance of tax by August 17 |
An extension moves the paperwork, not the money. Penalty and interest apply to any part of the 90% not paid by May 15, 2026, and to any part of the remaining 10% not paid by November 16, 2026. Two details from the Comptroller's extension questions page: a first annual report cannot use the 100%-of-prior-year option, and an EFT payer who missed the May 15 extension cannot pick up the November date later. If you paid the extension online, do not also mail a paper Form 05-164.
The 2027 report, covering your accounting period that ends in 2026, is due Monday, May 17, 2027, because May 15, 2027 falls on a Saturday. The threshold and rates stay at the 2026 figures, since the Comptroller sets them in two-year blocks. A Texas LLC formed at any point in 2026 files its first annual report by May 17, 2027, covering the date it became subject to the tax through its federal year-end; an LLC formed in 2025 owed its first report on May 15, 2026. Texas requires no estimated franchise tax payments at any point in the year.
Everything is filed through the Comptroller's Webfile system, and the current forms live on the 2026 franchise tax forms page. The line-by-line booklet is Form 05-915, 2026 Texas Franchise Tax Report Information and Instructions.
| Form | Name | Who uses it |
|---|---|---|
| 05-102 | Public Information Report | Corporations, LLCs, limited partnerships, professional associations, financial institutions; every year, with or without tax |
| 05-167 | Ownership Information Report | All other taxable entities; every year |
| 05-169 | EZ Computation Report | Entities above the threshold with revenue of $20 million or less that choose 0.331% of revenue |
| 05-158-A and 05-158-B | Franchise Tax Report (long form, pages 1 and 2) | Entities above the threshold using a margin method; the only route above $20 million |
| 05-164 | Extension Request | Only if you did not pay the extension online |
| 05-170 | Payment Form | Anyone paying by check instead of electronically |
Electronic payments through Webfile count as timely if submitted by midnight Central Time on the due date. Entities that paid $10,000 or more of franchise tax in the previous state fiscal year must pay electronically.
The Comptroller's penalty page and the 2026 instructions set out four consequences of missing May 15:
Forfeiture follows non-filing on a fixed clock. The Comptroller mails Form 05-211, Notice of Intent to Forfeit Right to Transact Business (the July and August 2026 batch went to entities that missed the 2026 requirements). If the entity does not file and pay within 45 days of that notice, its right to transact business in Texas is forfeited (Form 05-212), which means it cannot sue or defend itself in a Texas court. Under Texas Tax Code Section 171.255, officers and directors become personally liable for each debt the entity incurs in Texas after the due date and before the privileges are restored. Another 120 days without filing and the registration itself is forfeited (Form 05-213).
The cure is the same at every stage: file the missing report (or the PIR or OIR, under the threshold), pay tax, penalty, and interest, then confirm the account shows active on the Comptroller's franchise tax account status search. That search is what Texas offers instead of a certificate of good standing; a bank or buyer asking for one wants the printout showing the right to transact business is intact.
Entities in an affiliated group (more than 50% common ownership) that run a unitary business file one combined report, choosing a single margin method for the whole group and testing the $2,650,000 threshold and the $20 million EZ ceiling at the group level. A combined group at or below the threshold files no tax report or Affiliate Schedule, but each member organized in Texas or with Texas nexus still files its own PIR or OIR. The retail rate applies to the group only when its retail and wholesale revenue exceeds all other revenue.
Texas has no personal income tax and no corporate income tax, so the franchise tax report is the only state-level tax return most LLCs file. Two other obligations sit alongside it. An LLC that sells or leases tangible personal property or taxable services in Texas needs a sales and use tax permit from the Comptroller and collects the 6.25% state rate plus up to 2% in local tax (8.25% combined at most) on its own filing schedule; our Texas tax deadlines calendar lists those dates. An LLC with employees also registers with the Texas Workforce Commission for unemployment tax.
Federal treatment does not change. A single-member LLC reports profit on Schedule C under the IRS Schedule C instructions, a multi-member LLC files Form 1065 under the Form 1065 instructions, and either can elect S-corporation status; the classification rules live in Treasury Regulation Section 301.7701-3 and IRC Section 7701. Owners still pay self-employment tax under IRC Section 1402 on Schedule C profit. The Texas LLC annual cost calculator totals the state-level bill, and our Texas LLC formation guide covers the Secretary of State side. For a contrast, the California LLC tax regime charges an $800 minimum plus a gross-receipts fee from $250,000 of income, where Texas charges nothing until $2,650,000.
At Anna Money we supported 60,000+ small businesses under one national tax authority; the Texas pattern we see now is owners who track only the IRS calendar and learn about the PIR from a Form 05-211 notice.
Every line of this report starts from one number, annualized total revenue, and most of the pain comes from reconstructing it in the second week of May. Jupid is an AI accountant that connects to your business bank accounts and categorizes each transaction automatically at 95.9% accuracy, so your running revenue, cost of goods sold, and payroll totals are ready when the report is. Ask in WhatsApp or iMessage "am I under the $2.65 million Texas threshold this year?" or "what would EZ cost me versus the long form?" and the answer comes from your actual books, in real time, with the May 15 and November 16 dates already on your calendar. Try Jupid.
This guide is for general educational purposes and does not constitute tax, legal, or accounting advice. Franchise tax results depend on your entity type, accounting period, apportionment, and which deductions your business qualifies for, and the Comptroller adjusts the threshold and compensation cap every two years. For advice specific to your situation, consult a qualified tax professional or the Texas Comptroller at comptroller.texas.gov.
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Form 1065 instructions for 2026: who files, lines 1a–23, the Schedule B test ($250,000 receipts, $1 million assets) to skip L, M-1, M-2, and the $255 penalty.
Form 1120-S instructions for 2026: who files, lines 1a–28, officer compensation on line 7, the $250,000 Schedule B test to skip L and M-1, and the $255 penalty.
Correct a filed tax return with Form 1040-X. Check when to amend, refund deadlines, current line numbers, required attachments, and IRS processing times.
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