Texas lesson 5 of 6
Texas franchise tax and the May 15 report
Texas has no personal income tax, so the state raises revenue from businesses through the franchise tax. Most small LLCs owe nothing, but almost all of them still have a filing obligation.
Who actually pays
The franchise tax is a tax on taxable margin, and it only bites above the Comptroller's no tax due threshold. The threshold is report-year dependent: it is $2,650,000 of annualised total revenue for the 2026 and 2027 report years, and was $2,470,000 for 2024 and 2025. Rates are 0.375 percent for retail and wholesale and 0.75 percent for everyone else. Because the threshold is set by legislation and adjusted periodically, check the Comptroller's current tax rates page for the report year you are filing.
Being at or below the threshold means no franchise tax is payable. It does not remove your reporting duty. Entities below the threshold no longer file a No Tax Due Report, but they must still file the appropriate information report for their entity type, which for an LLC is the Public Information Report or, for certain entities, the Ownership Information Report, by May 15.
What you still have to file
This is the part that catches people. Being under the threshold does not mean filing nothing. From the 2024 report year the Comptroller stopped requiring a No Tax Due Report from entities under the threshold, but those entities must still file the Public Information Report or the Ownership Information Report each year. The deadline is May 15.
Miss the report and the Comptroller can forfeit your LLC's right to do business in Texas, which also exposes the managers personally on debts incurred afterwards.
Other state taxes
Sales and use tax applies if you sell taxable goods or services in Texas, filed monthly, quarterly or annually depending on volume. If you have employees you register with the Texas Workforce Commission for unemployment tax. There is no state income tax on your share of LLC profits.
Key takeaways
- Most small Texas LLCs owe $0 franchise tax but must still file their information report by May 15.
- Check the Comptroller's current threshold rather than a cached figure.
- Failing to report can forfeit the LLC's right to do business.
Frequently asked questions
Is the franchise tax report filed with the Secretary of State?
No. It goes to the Texas Comptroller of Public Accounts, which is a separate agency from the Secretary of State.
Does Texas have an annual report?
Not in the way most states do. The annual obligation is the franchise tax report and the Public Information or Ownership Information Report filed with the Comptroller by May 15.
Official sources
Or let us file your Texas LLC for you
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Last reviewed: September 2026 - reviewed by Gullia Filing Legal & Formation Team