Texas

Texas Franchise Tax Guide for LLCs

Complete 2026 guide to Texasfranchise tax — rates, due dates, filing forms, exemptions, and how to minimize your LLC's state tax burden.

Does Texas have franchise tax on LLCs?

Yes — $0 for entities under $1.23M revenue

Texas Franchise Tax Structure

How it's calculated

Margin tax: 0.375% (retail/wholesale) or 0.75% (other) on taxable margin above $1.23M revenue threshold

Due date

May 15 annually

Filing form

Franchise Tax Report + Public Information Report

Key Things to Know About Texas Franchise Tax

Texas calls it 'franchise tax' but it's effectively a gross margin tax
Most small LLCs owe $0 but MUST still file the No Tax Due Report
Missed filings trigger loss of good standing and $50+ penalties

Possible Exemptions

Revenue under $1.23M (no tax owed, still must file)
Sole proprietorships and general partnerships
Tax-exempt entities

Verify eligibility with a CPA or the Texas Department of Revenue before claiming an exemption.

FAQ

Does my LLC owe franchise tax in Texas?

Yes. Texas imposes franchise tax or equivalent: Margin tax: 0.375% (retail/wholesale) or 0.75% (other) on taxable margin above $1.23M revenue threshold

When is Texas franchise tax due?

May 15 annually. Missed deadlines typically trigger penalties, interest, and loss of good standing. Always mark your calendar or use FormifyAI's compliance reminder service.

How do I file franchise tax in Texas?

Franchise Tax Report + Public Information Report. Most states now offer online filing through their Department of Revenue or Secretary of State portal. Payment can usually be made by ACH, credit card, or check.

What happens if I don't pay Texas franchise tax?

Failure to pay triggers: monetary penalties + interest on unpaid amounts, loss of good standing with the state, inability to file lawsuits or enforce contracts, and eventual administrative dissolution of the LLC. Administrative dissolution can retroactively pierce liability protection.

Can I avoid Texas franchise tax by forming elsewhere?

Generally no. If your LLC operates in Texas (has employees, office, or significant activity there), you'll owe Texas state taxes regardless of formation state. Forming in Delaware or Wyoming to "avoid" Texas taxes typically costs MORE (both states' fees) while providing no real tax benefit.

Are there exemptions from Texas franchise tax?

Possible exemptions: Revenue under $1.23M (no tax owed, still must file); Sole proprietorships and general partnerships; Tax-exempt entities. Consult a CPA familiar with Texas tax law for your specific situation.

Stay compliant with Texas franchise tax

FormifyAI tracks your Texas compliance deadlines and sends reminders so you never miss a franchise tax filing. Plus EIN, operating agreement, registered agent, and BOI report all bundled.

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FAQ

Does my LLC owe franchise tax in Texas?

Yes. Texas imposes franchise tax or equivalent: Margin tax: 0.375% (retail/wholesale) or 0.75% (other) on taxable margin above $1.23M revenue threshold

When is Texas franchise tax due?

May 15 annually. Missed deadlines typically trigger penalties, interest, and loss of good standing. Always mark your calendar or use FormifyAI's compliance reminder service.