Key Takeaways
- Texas has no state income tax for businesses, but it does charge other taxes.
- Most LLCs, corporations, and partnerships file a franchise tax report or an information report each May, even when no tax is due.
- Businesses that sell taxable items need a sales tax permit.
- Local governments tax business equipment and inventory.
- Employers also pay state unemployment tax and federal payroll taxes.
Texas has no income tax for businesses, but franchise, sales, property, and payroll taxes may apply. See who pays what, due dates, and how to stay on track.
Many new owners in Texas might think they owe no tax at the state level. Then a franchise tax notice arrives, or a customer asks why sales tax is missing from the receipt.
Business taxes in Texas do exist. They just look different from the taxes in other states. The taxes include franchise tax, sales and use tax, local property tax on business equipment, and state unemployment tax.
Franchise tax applies to most LLCs, corporations, and partnerships, and the report is due each May 15, even when no tax is owed. Sales tax applies if you sell taxable goods or services. Local governments tax business equipment and inventory worth more than $125,000. Employers also pay unemployment tax and federal payroll taxes.
Each one applies to a certain kind of owner, and each has its own due date. This guide explains it in detail, so you can plan your first tax year with confidence.
What Taxes Do Texas Businesses Have to Pay?
Most Texas businesses deal with a mix of the taxes below. Which ones apply to you depends on your structure, what you sell, and whether you have employees.
Tax | Who pays it | Who collects it | Due date |
Franchise tax and information report | Most LLCs, corporations, and partnerships | Texas Comptroller | May 15 each year |
Sales and use tax | Businesses that sell taxable goods or services | Texas Comptroller | Monthly, quarterly, or yearly, on the 20th |
Business personal property tax | Businesses that own equipment or inventory | Local taxing units, through the county appraisal district | Property report due April 15 |
State unemployment tax | Employers | Texas Workforce Commission | Quarterly |
Federal income and payroll taxes | Businesses of all types | IRS | Varies by tax |
The next franchise tax due date is May 17, 2027. May 15 falls on a Saturday that year, so the deadline moves to the next business day.
New to Texas? Our guide to starting a business in Texas walks through the other steps that come with these taxes.
What is the Business Tax Rate in Texas?
Texas does not have one flat business tax rate. Each tax has its own rate.
Tax | Rate | What it applies to |
Franchise tax, retail or wholesale | 0.375% | Taxable margin |
Franchise tax, other businesses | 0.75% | Taxable margin |
Franchise tax, EZ Computation | 0.331% | Total revenue, for businesses with up to $20 million in revenue |
Sales and use tax | 6.25% state rate, plus up to 2% local | Taxable sales, with a combined maximum of 8.25% |
State unemployment tax, new employers | 2.70% in 2026 | The first $9,000 of each employee's pay each year |
Franchise tax is based on taxable margin, not profit. Margin is the part of your revenue that Texas taxes after one of a few allowed subtractions, such as cost of goods sold or pay to workers. The Comptroller's franchise tax overview lists each method. The EZ Computation is simpler, but it does not let you subtract costs.
The Comptroller's franchise tax page shows the current franchise rates. The sales tax page covers sales tax rates, and the Texas Workforce Commission explains unemployment tax rates.
How Much Tax Do Businesses Pay in Texas?
The amount depends on your revenue, what you sell, and whether you have workers. Here are four common cases.
- Small businesses: If your yearly revenue is at or below $2.65 million, you owe no franchise tax for the 2026 and 2027 reports. You still file an information report each year.
- Sellers: Sales tax comes from your customers. You collect it at checkout and send it to the state, so it does not come out of your profit.
- Employers: Unemployment tax applies only to part of each worker's yearly pay, so the cost stays fairly predictable.
- Owners of equipment or inventory: Property tax depends on the value of what you own and the local tax rates where you operate.
These are general examples. A Texas tax professional can give you a number that fits your business.
Do Texas Businesses Have to Pay Franchise Tax?
Most do have to file, and many owe nothing. Texas applies the franchise tax to corporations, LLCs (including single-member LLCs), S corporations, and partnerships such as LPs and LLPs. Sole proprietorships and general partnerships owned only by individuals are generally exempt, according to the Comptroller.
If you run an LLC, our Texas LLC guide shows how franchise tax fits into the bigger picture.
What is the No Tax Due Threshold for 2026?
The no tax due threshold is $2.65 million in yearly revenue for the 2026 and 2027 reports. If your revenue is at or below that amount, you owe no franchise tax.
You still file a Public Information Report or an Ownership Information Report each year. The Comptroller explains which report fits each entity type.
How Do You File Texas Franchise Tax?
You file online through the Comptroller's Webfile system, and the report is due May 15. Entities above the threshold file a franchise tax report and pay any tax due. Entities at or below the threshold file only the information report.
How Can You Check the Status of Your Texas Franchise Tax Account?
The Comptroller lets you look up your account status online. Check it after you file to confirm your account is current.
Do You Pay Taxes on a Business That Makes No Money?
No, you generally do not pay any tax if your business doesn’t make money, but filing still matters. A business with no revenue is below the no tax due threshold, so it owes no Texas franchise tax. It still files the yearly information report.
For federal taxes, a business with no profit generally has no income tax to pay. Your structure decides which return you file, so check with a tax professional if you are unsure.
Does My Business Need to Pay Sales Tax in Texas?
If you sell taxable goods or services, yes. You collect sales tax from customers and send it to the state. Texas also charges use tax when you buy taxable items from out of state without paying Texas sales tax. The Comptroller explains use tax on its site.
How Do You Apply for a Texas Sales Tax Permit?
You apply with the Texas Comptroller through its sales tax permit page. Texas does not charge a fee for the permit. However, in some cases, the Comptroller may ask for a security deposit. Our Texas seller's permit guide covers the steps in more detail.
After your application is approved, the Comptroller sends a letter that tells you whether you file monthly or quarterly.
When is Texas Sales Tax Due?
The Comptroller's due date schedule follows your filing schedule:
- Monthly filers: the 20th of the month after the reporting month.
- Quarterly filers: April 20, July 20, October 20, and January 20.
- Yearly filers: January 20 for the prior year.
When a due date lands on a weekend or holiday, it moves to the next working day.
Is There Business Property Tax in Texas?
Yes, but it comes from local governments, not the state. Cities, counties, and school districts tax business personal property, such as computers, machinery, furniture, and inventory.
If you own tangible property that helps you earn income, you file a property report, called a rendition, with your county appraisal district by April 15. If your business owns personal property worth $125,000 or less, it generally does not need to file a full rendition, but it may need to file a statement or report claiming the exemption under HB 9. The Comptroller's rendition notice explains who files. It lists the property you owned on January 1.
What Employer Taxes Do Texas Businesses Pay?
Taxes for employees come from three places. Each one has its own rules.
What Federal Payroll Taxes Do Employers Pay?
Employers withhold federal income tax, Social Security tax, and Medicare tax from employee pay. You also pay a matching share of Social Security and Medicare, plus federal unemployment tax. The IRS employment taxes page lays out each one.
Who Has to Pay Texas Unemployment Tax?
Most employers do. The Texas Workforce Commission says you become liable when you pay $1,500 or more in wages in a calendar quarter, or have at least one worker in 20 different weeks of a year. You then register for a tax account, report wages each quarter, and pay the tax.
Do You Have to Report New Hires in Texas?
Yes. Texas employers report each new hire or rehire to the Office of the Attorney General within 20 days.
Do LLCs, S Corps, and Sole Proprietors Pay Different Taxes in Texas?
Yes. Your business structure changes which taxes apply.
Business type | Texas franchise tax | Federal income tax |
Sole proprietorship | Not required | Reported on the owner's personal return |
LLC (including single-member) | Required | Usually passes through to the owners |
S corporation | Required | Passes through to shareholders |
C corporation | Required | Taxed as its own entity |
Partnership (LP or LLP) | Required | Passes through to the partners |
Pass-through means the business does not pay federal income tax itself. The profit shows up on the owners' tax returns instead. Our post on LLC tax benefits and our Texas S corp guide go deeper on both options. You can also use the business type comparison tool to see them side by side.
Do Some Industries Pay Extra Texas Taxes?
Yes. Some industries have their own taxes, forms, and due dates. Common examples include hotel occupancy tax, mixed beverage tax, motor fuels tax, oil and gas production tax, and insurance premium tax.
The Comptroller keeps a full list on its all taxes and fees page.
What Happens If You Miss a Texas Tax Deadline?
A missed deadline is fixable. The Comptroller adds a $50 fee to a franchise tax report or sales tax report that is filed late. If tax is paid late, a 5 percent charge applies for 1 to 30 days, and 10 percent after that. Interest on past-due tax starts 61 days after the due date. You can read the details on the franchise tax page.
The Comptroller also explains penalty waivers, which may help if you have a good reason for filing late. The simplest fix is to file the report and pay what you owe as soon as you can.
What If You Do Business in More Than One State?
If your business is based elsewhere but sells or works in Texas, you may have a nexus. Nexus means enough business ties to Texas that you must follow its tax rules.
Remote sellers do not need a Texas permit until their Texas revenue reaches $500,000 in the previous 12 months, according to the Comptroller's remote seller page. Out-of-state businesses with nexus in Texas must also file the yearly franchise tax report or information report.
How Can You Stay Organized for Texas Business Taxes?
A few habits make tax season easier:
- Build a tax calendar. Add the franchise tax, property report, and sales tax due dates in one place.
- Keep business money separate. Use a business bank account and card so your records stay clean.
- Use accounting software. It tracks sales, expenses, and payroll in one spot.
- Save your records. Texas requires sellers to keep sales records for at least four years, as the Comptroller notes.
- Ask for help. A Texas tax professional can confirm which taxes apply to you.
Ready to Set Up Your Texas Business the Right Way?
Texas has no state income tax, but you still have a few filings to track. The main ones are franchise tax, sales tax, property tax, and payroll taxes. Your structure and your products decide which ones apply to you.
Swyft Filings has helped 600,000+ businesses since 2015. If you have not formed your business yet, you can start an LLC with us. We also offer a free 30-minute tax consultation through our partner 1-800Accountant with our Standard and Premium packages.
FAQs
Texas has no state income tax, so there are no state estimated payments. Owners who expect to owe $1,000 or more in federal tax still pay the IRS in quarterly installments, usually April 15, June 15, September 15, and January 15. These cover income and self-employment tax, since no employer withholds them.
Usually, when the item you sell is taxable, delivery charges on a taxable sale generally carry sales tax too, even if you list them as a separate line. If the item is exempt, the shipping charge is typically exempt as well. Mixed shipments are trickier, so check the Comptroller’s guidance.
A resale certificate lets you buy items you plan to resell without paying sales tax to your supplier. You give the seller a completed Form 01-339 with your Texas taxpayer number. You collect the tax later from your own customers. It does not cover supplies you use to run the business.
Some are. Texas taxes certain services listed in state law, such as data processing and nonresidential remodeling, but many services are not taxed. Downloaded software, e-books, and streaming are generally taxable. Check the Comptroller’s taxable services list before you set prices, since one service line can change what you charge.
