Texas franchise tax: what it is, who files, and when (the 2026 LLC guide)
Despite the name, franchise tax has nothing to do with franchises. It’s a state tax most Texas LLCs must report every year — even when they owe nothing.
If you formed a Texas LLC, sooner or later you’ll hear the term “franchise tax.” Confusing name aside, it’s not about restaurant chains: it’s a state tax on your LLC’s revenue, and nearly every LLC registered in Texas must file the Franchise Tax Report annually — even when nothing is owed.
This guide covers exactly what it is, who files, what it costs under the 2026 threshold, the key dates, and what happens if you miss them.
What exactly is the franchise tax?
It’s a tax the State of Texas charges business entities operating inside its borders: LLCs, corporations and partnerships. In practice it’s Texas’s “privilege tax” — you pay for the privilege of doing business formally in the state.
It’s administered by the Texas Comptroller of Public Accounts, the same agency behind sales tax. Texas has no personal income tax, but it does tax business entities through this annual filing.
Who has to file?
Practically every entity registered with the Texas Secretary of State files, whether it made money, lost money, or did nothing:
- LLCs — single-member and multi-member, registered in Texas.
- Corporations — S-Corps and C-Corps alike.
- Limited partnerships (LPs) and other state-registered entities.
The common exceptions are sole proprietorships (businesses run under a personal name, with no registered entity) and some specifically exempt nonprofits. If your business is a registered LLC, corporation or partnership — this applies to you.
What does it cost?
The 2026 no-tax-due threshold
Every two years the Comptroller adjusts the revenue threshold below which no franchise tax is owed. For reports filed in 2026 and 2027, the threshold is $2.65 million in annualized total revenue.
At or below $2.65 million, you owe no franchise tax. One important change: since 2024 the Comptroller eliminated the separate “No Tax Due Report” — it no longer exists as its own form. Below the threshold you pay nothing, but you still file your Public Information Report every year. Filing remains mandatory; only the form changed.
Above the threshold
Past $2.65 million annualized, the rate depends on your industry:
| Method / industry | Rate | Applies when… |
|---|---|---|
| Retail and wholesale | 0.375% | Your LLC sells at retail or wholesale |
| Other industries | 0.75% | Any other line of business |
| E-Z Computation | 0.331% | Annualized revenue of $20 million or less, on total revenue (simplified, no deductions) |
These are the Comptroller’s current rates — always verify the current year’s figures at comptroller.texas.gov, since the threshold adjusts for inflation every two years.
Deadlines and how to file
The annual deadline is May 15, for the report covering the prior fiscal year. Unlike the IRS’s federal April 15, this one lands a month later — one of the details that trips up LLC owners most.
Can’t make it? Request an extension by May 15 (through Webfile or Form 05-164) and the deadline moves to November 15 — you must pay at least 90% of this year’s tax or 100% of last year’s reported tax. EFT payers get August 15.
- Create or log in to your account on the Comptroller’s Webfile system.
- If your LLC’s annualized revenue is $2.65 million or less, you file only your Public Information Report — there’s no tax report to fill out.
- Above that, you also file the EZ Computation Report (total revenue of $20 million or less, no deductions or credits) or the Long Form Report (above $20 million, or to take deductions or credits).
- Submit electronically through Webfile, or by mail where your case allows.
The Public Information Report (PIR)
Alongside the tax report you file the Public Information Report (PIR, Form 05-102) — the one for LLCs, corporations and limited partnerships; the Ownership Information Report (OIR, Form 05-167) covers other entity types. It lists your LLC’s officers and directors, and it’s public: anyone can look it up with the state. Note that a Registered Agent change isn’t made on the PIR — you file it directly with the Secretary of State.
What happens if I don’t file?
The consequences are staged, and they stack fast:
- A $50 penalty per report filed after the deadline, owed tax or not.
- A 5% penalty on tax due when payment lands 1–30 days late — rising to 10% past 30 days.
- If you don’t catch up, the Comptroller mails a notice, and 45 days after it, with nothing filed or paid, it declares forfeiture: your LLC loses its right to do business in Texas.
- In forfeiture, your LLC can’t sue or defend itself in a Texas court, and officers, directors, members or owners can become personally liable for certain debts the LLC takes on while it stays forfeited.
- To reinstate: file every overdue report, pay the penalties and any tax owed, and — if the Secretary of State already forfeited the LLC — get a tax clearance letter from the Comptroller to file reinstatement with the Secretary of State.
Common mistakes
- Believing “I owe nothing” means “I don’t have to file.”
- Filing the tax report but forgetting the Public Information Report.
- Mixing up the deadline: it’s May 15, not the IRS’s April 15.
- Not updating your Registered Agent’s address with the state.
- Reporting the wrong annualized revenue because the books aren’t current.
How to make it painless
With bookkeeping up to date, filing takes half an hour: your annualized revenue is already computed and it’s a matter of the right form. Without it, you can lose days reconstructing a year of numbers.
Our monthly bookkeeping keeps your numbers ready for franchise tax every May, and we coordinate your federal tax preparation in the same engagement. LLC not formed yet? We open it with compliance right from day one.