Key Takeaways
- Every Texas LLC is a taxable entity. The franchise tax is a privilege tax, and it applies regardless of federal tax classification, including single-member LLCs treated as disregarded entities.
- No-tax-due threshold. $2,650,000 in annualized total revenue for reports due in 2026 and 2027, up from $2,470,000 for 2024 and 2025 reports.
- Rates above the threshold. 0.75% of taxable margin for most businesses, 0.375% for retail and wholesale, or 0.331% of revenue under the optional EZ Computation (revenue of $20 million or less).
- The 2027 report is due Monday, May 17, 2027, because May 15 falls on a Saturday.
- Skipping the filing is costly. There is a $50 penalty per late report, 5% to 10% of any unpaid tax, interest, and eventually forfeiture of your LLC’s right to transact business in Texas.
Learn how Texas franchise tax works for LLCs in 2027, including thresholds, filing requirements, deadlines, penalties, required reports, and how to file.
Texas has no personal income tax, so many founders assume a Texas LLC owes the state nothing. That assumption is where small business owners get into trouble. The Texas franchise tax is a separate, entity-level tax, and the paperwork is required every year even when the bill is zero.
This guide explains how the Texas franchise tax for LLCs works, including who owes it, how much it costs, how to calculate it, what to file, when it is due, and what happens if you miss it.
What Is the Texas Franchise Tax Threshold for LLCs?
The Texas no-tax-due threshold for 2026 is $2,650,000 of annualized total revenue. The Comptroller sets it for two-year periods, and it applies to both 2026 and 2027 reports.
Two details trip people up:
- It is measured on total revenue from your entire business, not just Texas sales and not just profit.
- Texas names reports by the year they are due. The 2026 report covers the accounting period that ended in 2025, which for a calendar-year LLC is January 1 to December 31, 2025.
Report year | Applies to | No tax due threshold |
2024 and 2025 | Reports due in 2024 and 2025 | $2,470,000 |
2026 and 2027 | Reports due in 2026 and 2027 | $2,650,000 |
Looking for the Texas Comptroller's franchise tax no-tax-due threshold? For the 2025 report year, the threshold was $2,470,000. For the 2026 report year, it increased to $2,650,000. Always use the threshold applicable to your report year. Eligible businesses with annualized total revenue at or below the threshold generally owe no franchise tax, but may still need to file a Public Information Report (PIR) or Ownership Information Report (OIR).
Who Needs to Pay Texas Franchise Tax?
The franchise tax applies to “taxable entities,” a group that includes LLCs, corporations, limited partnerships, and professional associations. Sole proprietorships and general partnerships made up entirely of natural persons are generally not taxable entities, and a few others, such as certain passive entities and nonprofits, may qualify for exclusions or exemptions.
If you formed an LLC in Texas, it is a taxable entity. That includes:
- Single-member LLCs. Being a disregarded entity for federal income tax does not remove the Texas filing requirement.
- Multi-member LLCs. These are taxed as partnerships federally, but Texas still treats the LLC itself as the taxpayer.
LLCs with no profit or no employees. The tax is based on revenue and margin, not on profit.
How Much Is Franchise Tax for an LLC in Texas?
There is no flat LLC fee. Texas does not charge a standard annual report fee, and an LLC at or below the threshold owes $0. Above the threshold, the tax is a percentage of your taxable margin.
Item | 2026–2027 reports |
No tax due threshold | $2,650,000 |
Tax Rate (retail or wholesale) | 0.375% |
Tax Rate all other businesses (other than retail or wholesale) | 0.75% |
EZ Computation rate (revenue of $20 million or less) | 0.331% |
Compensation deduction limit (per person) | $480,000 |
EZ Computation Total Revenue Threshold | $20 million |
If your calculated tax is under $1,000, no payment is due, but you still file the report.
Source: Comptroller Franchise Tax Page
How to Calculate Texas Franchise Tax for a Small LLC
To calculate your Texas franchise tax for an LLC, you first need to determine your LLC’s taxable margin. This is the amount of revenue subject to the franchise tax calculation, after applying the deductions or calculation method allowed under Texas law.
Texas allows you to calculate your margin using four methods:
- 70% of total revenue: Multiply your total revenue by 70%.
- Revenue minus cost of goods sold (COGS): Subtract eligible costs directly related to producing or selling your goods from your total revenue.
- Revenue minus compensation: Subtract eligible employee compensation and benefits from your total revenue, subject to the applicable limits.
- Revenue minus $1 million: Subtract $1 million from your total revenue.
You can generally choose the method that produces the lowest taxable margin. However, you cannot combine the COGS and compensation deductions in the same calculation. You must choose one of these deductions, where applicable, and follow the Comptroller’s rules for making your election.
Once you determine your taxable margin, you apply the applicable tax rate and Texas apportionment rules to calculate the tax owed. Your apportionment factor reflects the portion of your revenue attributable to Texas.
IMPORTANT: The $1 million deduction is a calculation method, not the same as the annual no-tax-due threshold. If your LLC qualifies for the no-tax-due threshold for its report year, it generally owes no franchise tax, although applicable information-reporting requirements may still apply.
Let us explain these methods with an illustrative example to help you better understand. Suppose a Texas Consulting LLC has $4 million in revenue. Assume all revenue comes from Texas customers, there is no COGS, and compensation is $1,800,000.
Calculation method | Calculation | Calculated margin |
1. 70% of total revenue | $4,000,000 × 70% | $2,800,000 |
2. Revenue minus COGS | $4,000,000 − $0 | $4,000,000 |
3. Revenue minus compensation | $4,000,000 − $1,800,000 | $2,200,000 |
4. Revenue minus $1 million | $4,000,000 − $1,000,000 | $3,000,000 |
The lowest margin is $2,200,000. At 0.75%, the tax is $16,500. Under the EZ Computation, the same LLC would pay 0.331% of $4,000,000 in revenue, which is $13,240. The EZ method allows no COGS or compensation deductions, so it wins only when your deductions are small. Check both before you file.
NOTE: This is an illustration, not tax advice. Your real number depends on how your revenue is defined, your Texas receipts ratio, and any credits.
Texas LLC Annual Franchise Tax Filing Requirements
What you file depends on your revenue.
Annualized total revenue | What the LLC files |
$2,650,000 or less | Public Information Report (Form 05-102) only |
Above $2,650,000 up to $20 million | Franchise Tax Report (long form 05-158-A/B) or EZ Computation (05-169), plus the PIR |
Above $20 million | Long form Franchise Tax Report, plus the PIR |
Wondering what the difference is between a no tax due report and the long form? Texas discontinued the separate No Tax Due Report (Form 05-163) starting with the 2024 report year. An LLC at or below the threshold now files only the information report. The long form (05-158) is the full margin calculation for LLCs above the threshold.
Texas Comptroller Public Information Report Requirements for LLCs
The Public Information Report (PIR) lists your LLC’s managers or members, along with the registered agent and registered office. The information becomes public record, and an authorized person signs it. Keep your registered agent details current so Comptroller notices reach you.
Texas Franchise Tax Filing Deadlines for 2026 and 2027
Franchise tax reports and Public Information Reports are due every year on May 15. When May 15 falls on a weekend or holiday, the deadline moves to the next business day.
Report | Original due date | Extended due date |
2026 report | May 15, 2026 | November 16, 2026 |
2027 report | Monday, May 17, 2027 | November 15, 2027 (confirm on the Comptroller site) |
An extension gives you more time to file, not more time to pay. To keep an extension valid, you generally need to pay by May 15 either 90% of the current-year tax or 100% of the prior-year tax. Check the Comptroller’s franchise tax page for current extension rules.
How to File Your Texas Franchise Tax Report for an LLC?
- Confirm your report year and accounting period. The 2027 report covers 2026.
- Add up annualized total revenue from your entire business.
- Compare it to $2,650,000. At or below, you file the PIR only.
- If above, choose a method: long form with the lowest-margin method, or EZ Computation if revenue is $20 million or less.
- File and pay through Comptroller WebFile. The Comptroller prefers online filing, and you will need your Texas taxpayer number and WebFile number.
- Save your confirmation and keep the revenue, COGS, and compensation records that support your numbers.
What Are the Penalties for Late Texas Franchise Tax Filing?
A missed deadline to file your Texas franchise tax report for an LLC is expensive even when you owe no tax.
Penalty | Amount |
Late report | $50 flat, per report, even with $0 tax due |
Late payment, 1 to 30 days | 5% of tax due |
Late payment, more than 30 days | 10% of tax due |
Interest | Past due taxes are charged interest beginning 61 days after the due date |
If you do not file or pay, the Comptroller sends a Notice of Intent to Forfeit (Form 05-211). You generally have 45 days to fix the problem before the right to transact business is forfeited (Form 05-212).
Forfeiture has real consequences:
- The LLC is denied the right to sue or defend in Texas courts while the forfeiture lasts (Tax Code § 171.252).
- Officers, directors, members, or owners can become liable for debts incurred after the report’s due date.
- Contracts signed during forfeiture can be challenged.
How to Reinstate a Forfeited Texas LLC:
- File every delinquent report, including the PIR, and pay all taxes, penalties, and interest.
- Request a tax clearance letter (Form 05-391) from the Comptroller.
- File the Application for Reinstatement (Form 801) with the Secretary of State, which carries a $75 fee.
See our guide to reinstating an LLC, and order a certificate of good standing once you are current.
Texas Franchise Tax Guide for New Small Business Owners
If you are starting a small business in Texas, build these habits from day one:
- Set up your entity correctly. Form your Texas LLC and get an EIN.
- Know your first deadline. A new LLC generally files its first report by May 15 of the year after it forms. Confirm your date with the Comptroller.
- Track revenue monthly so you know early whether you are near $2,650,000.
- Keep COGS and compensation records in case you exceed the threshold.
- Protect your mail. Use a registered agent so notices are never missed, or use ComplianceGuard to stay on top of deadlines.
- Close properly. A Texas entity that terminates, converts, or merges must file its final report and pay any tax due in the year it plans to do so.
Disclaimer: This guide is for general information and is not legal or tax advice. Confirm figures with the Texas Comptroller or a CPA.
Conclusion
The Texas franchise tax for LLCs is easy to handle once you know the rules. Check your revenue against the $2,650,000 threshold, file the Public Information Report every year, and put May 17, 2027, on your calendar for the next report. If your LLC grows past the threshold, compare the margin methods and the EZ Computation before you file.
FAQs
An LLC is subject to the tax, but it owes nothing if annualized total revenue is $2,650,000 or less. It must still file a Public Information Report each year.
It is $0 at or below the threshold. Above it, the rate is 0.75% of taxable margin for most businesses, 0.375% for retail and wholesale, or 0.331% of revenue under the EZ Computation.
Taxable entities such as LLCs, corporations, and limited partnerships formed in Texas, plus out-of-state entities with nexus. Sole proprietorships and general partnerships of natural persons are generally not taxable entities.
Yes. Single-member LLCs are generally taxable entities in Texas. Whether they owe franchise tax depends on their revenue and applicable exemptions. LLCs below the no-tax-due threshold generally must still file a PIR or OIR, as applicable.
The Texas franchise tax no-tax-due threshold was $2,470,000 for the 2025 report year. It increased to $2,650,000 for 2026 and remains $2,650,000 for 2027. Always check the threshold applicable to your report year.
No. Texas does not charge a flat annual report fee for LLCs. Instead, businesses must meet applicable franchise tax reporting requirements and file a Public Information Report (PIR) or Ownership Information Report (OIR), as required.
Missing the May 15 deadline can result in a $50 late-filing penalty per report, plus applicable penalties and interest on unpaid tax. Continued noncompliance may lead to forfeiture of your LLC's right to transact business in Texas.
Yes. An LLC that files federal Form 1065 as a partnership is still a taxable entity in Texas. Federal classification decides how profits pass through to the members. It does not change the LLC’s Texas franchise tax status.
Possibly. Texas tax reporting applies to entities that are physically present in Texas or that earn at least $500,000 in gross receipts from Texas sources. A foreign LLC that registers to do business in Texas is generally subject to the tax as well. An out-of-state entity that stops having nexus in Texas files a final report within 60 days of ceasing to have nexus.
