--- title: "Texas Business Taxes: Franchise, Sales and Property Tax Explained" description: "A plain guide to the Texas taxes a small business may face: franchise tax, sales and use tax, property tax and payroll tax, with 2026 and 2027 figures and..." url: https://wallacecpa.multisites.ai/guides/texas-business-taxes publisher: Wallace CPA phone: +1-877-682-1171 quote: https://wallacecpa.multisites.ai/contact --- # Texas business taxes, explained for small business owners Texas has no state income tax, but a business can still owe several others. The main ones are the franchise tax, sales and use tax, property tax on business assets, and payroll taxes. Each has its own agency, form and due date. This guide lists them and links the official pages. Pillar guideUpdated October 21, 20268 min read ## No state income tax Texas does not tax personal income, but businesses still face franchise, sales, property and payroll taxes. ## Franchise tax every May Most LLCs and corporations file a report by May 15, even when no tax is due. ## Sales tax is collected for the state A seller who collects Texas sales tax holds that money for the Comptroller and files on a set schedule. ## Property tax is local Appraisal districts set values. Business equipment can be taxed along with land and buildings. This page is general information about Texas business taxes. It does not give advice for your business. The rules and amounts below were checked against the official pages on October 21, 2026. Tax years are named wherever a number or date can change. ## Which Texas taxes can a small business face? A Texas business can face four groups of taxes: franchise tax, sales and use tax, property tax, and payroll taxes. Texas has no state income tax, according to the [Texas Comptroller](https://comptroller.texas.gov/economy/fiscal-notes/industry/2025/small-biz-info/). That fact does not mean Texas businesses pay little tax. It means the taxes arrive in other forms. Each tax has its own agency, form and schedule. That is the main source of missed filings. The table gives the overview. Tax Who it reaches Who collects it Usual timing Franchise tax Most LLCs, corporations and partnerships doing business in Texas Texas Comptroller Annual report due May 15 Sales and use tax Sellers of taxable goods and services Texas Comptroller Monthly, quarterly or yearly, on the 20th Property tax Owners of land, buildings and business equipment County appraisal district and local taxing units Value notices in spring, tax bills in fall Payroll taxes Employers with employees IRS, plus the state for unemployment tax Quarterly reports, frequent deposits Federal income tax Every business, in a form that depends on its entity IRS Spring, with estimated payments through the year The rest of this page takes each one in turn. Your entity type shapes how several of them apply. ## Who has to file the Texas franchise tax report? Most entities formed in Texas or doing business in Texas must file it. The Comptroller calls the franchise tax “a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas.” LLCs, corporations and most partnerships are taxable entities. Sole proprietorships are not subject to the tax. The Comptroller’s overview lists “sole proprietorships (except for single member LLCs)” as not subject. A single member LLC is therefore a taxable entity, even if it files like a sole proprietor for federal tax. The annual report is due May 15. If that date falls on a weekend or holiday, it moves to the next business day. In 2027, May 15 is a Saturday, so the due date moves to Monday, May 17. An extension, if requested on time and paid correctly, moves the due date to November 15. The [Texas franchise tax guide](https://wallacecpa.multisites.ai/guides/texas-franchise-tax) walks through the steps. ## What is the no tax due threshold? It is a revenue line. If your annualized total revenue is at or below it, you owe no franchise tax. The Comptroller sets it as $2.65 million for the 2026 report, and lists the same figure for 2027 reports. Since reports due on or after January 1, 2024, a business at or below the threshold does not file a No Tax Due Report. It must still file a Public Information Report or an Ownership Information Report. Many owners miss this step because they think “no tax due” means “no filing.” The glossary explains the [no tax due report](https://wallacecpa.multisites.ai/glossary/no-tax-due-report) and the [Texas franchise tax](https://wallacecpa.multisites.ai/glossary/texas-franchise-tax). The rate matters only above the threshold. For 2026 and 2027 reports, the Comptroller lists 0.75 percent for most businesses and 0.375 percent for retail or wholesale. The tax is not charged on all revenue. It is charged on a margin, and the margin rules are in the Comptroller’s instructions. ## Do I need a Texas sales tax permit? If you sell taxable goods or services in Texas, you generally need a permit before you collect the tax. Texas charges a state sales and use tax of 6.25 percent on most retail sales, leases and rentals of goods, plus taxable services. Cities, counties and special districts can add up to 2 percent. The maximum combined rate is 8.25 percent. The Comptroller tells new permit holders by letter whether they file monthly, quarterly or yearly. Monthly filers report by the 20th of the following month. Quarterly filers report on April 20, July 20, October 20 and January 20. Yearly filers report on January 20. Local rates depend on the address of the sale. Use the Comptroller’s Sales Tax Rate Locator rather than a rate you saw in an old post. Sales tax is not your money. You collect it for the state. Keep it in a separate account, so the cash is there on the 20th. ## How does property tax reach a business? Texas has no state property tax. The Comptroller says that “Property tax in Texas is locally assessed and locally administered.” The county appraisal district sets a value. Cities, counties, school districts and other taxing units set the rates. Business owners often forget that equipment is taxable too. The Comptroller states that all real and tangible personal property is taxable in proportion to its appraised value, unless the Texas Constitution allows an exemption. Land, buildings, machinery, furniture and inventory can all appear on the roll. You can protest a value. In Tarrant County, a protest goes first to the appraisal district and then, if needed, to the Appraisal Review Board. The board is, in the words of the Tarrant Appraisal District, “an independent board of citizens.” The steps and deadlines for Tarrant and Denton counties are in the [property tax protest guide](https://wallacecpa.multisites.ai/guides/property-tax-protest-tarrant-denton). The general deadline to apply for an exemption is before May 1, according to the Comptroller. ## What payroll taxes does an employer owe? An employer owes federal payroll taxes on wages and reports them on a schedule. The IRS states that every employer who pays employees must report wage payments and related employment taxes. The usual forms are the [Form 941](https://wallacecpa.multisites.ai/glossary/form-941) each quarter and the Form W-2 each January. Payroll tax includes income tax withheld from pay, plus Social Security and Medicare tax. The employer pays a share too. Late deposits create penalties fast, so most employers run payroll through a system that tracks deposits. Texas also has a state unemployment tax for employers. Check the Texas Workforce Commission for your account and rate. See the glossary entry on [payroll tax](https://wallacecpa.multisites.ai/glossary/payroll-tax) for the plain definition. A contractor is not an employee. Paying a contractor brings a different duty: you may need a Form W-9 on file and a Form 1099-NEC at year end. Calling someone a contractor does not make them one for tax purposes. The facts of the work decide it. ## What about hotel occupancy tax and other taxes? Some businesses owe taxes that do not apply to others. A lodging business, including some short-term rentals, may owe a hotel occupancy tax. Cities can add their own. A business with a vehicle fleet, alcohol sales or fuel sales may owe more again. Do not assume your business is exempt because it is small. Check the Comptroller’s list of taxes and fees for your industry. ## What should I do if I get a notice from the Comptroller? Read it, find the form number, and answer by the date on it. The Comptroller’s notice page explains each form and how to resolve it. Franchise tax notices matter most because they can lead to the loss of the right to transact business. Form 05-211 is a Notice of Intent to Forfeit Right to Transact Business. On the Comptroller’s front page, the agency describes it this way: if you receive it, “you failed to meet 2026 franchise tax filing requirements.” If you are at or below the no tax due threshold, the fix may be as simple as filing the information report. The Comptroller also states that there is no $50 penalty for late filing an information report. Do not ignore a notice, and do not pay a bill you have not checked. Compare the notice with your own records. Our guide on [what to do when you get an IRS notice](https://wallacecpa.multisites.ai/guides/irs-notice-what-to-do) uses the same steps for a federal letter. ## Which dates should I put on the calendar? Put the filing dates on one calendar, and set reminders two weeks early. The table lists the main dates for Texas businesses. It uses the 2026 and 2027 calendars. Dates that fall on a weekend move to the next business day. Date What is due Who files January 20 Yearly sales tax report; fourth quarter report for quarterly filers Sales tax permit holders January 31 Form W-2 to employees and Form 1099-NEC to contractors Employers and payers April 20 First quarter sales tax report Quarterly sales tax filers May 15 Annual franchise tax report and Public Information Report Taxable entities 20th of each month Monthly sales tax report Monthly filers November 15 Extended franchise tax report Entities with an extension Our [tax due dates page](https://wallacecpa.multisites.ai/tax-due-dates) keeps the federal and Texas dates in one place. The IRS dates for employers, such as Form 941, are on the IRS employment tax due dates page. ## How can a CPA help with Texas business taxes? A CPA can read your records, tell you which taxes apply to your entity, and set up a calendar. Whether a particular task is a fit depends on your business. Wallace CPA, PLLC lists small business accounting and payroll among its services, so the office is the right place to ask what help is on offer for franchise and sales tax reports. Good records make all of this easier. Keep revenue, sales tax collected and payroll in separate lines. Bring your Secretary of State filing, your EIN letter and last year’s reports to the first meeting. ## What records support these taxes? Records are the proof behind every return. Keep sales records that show taxable and exempt sales, with the resale or exemption certificates you accepted. Keep payroll reports, deposit receipts and filed quarterly forms. Keep your franchise tax report, the confirmation page and the revenue figures you used. Keep property tax notices, value notices and any protest paperwork. Store them in one place, by tax and by year. A folder per year with a short index sheet is enough. If a notice arrives, you can answer from the file instead of searching. The IRS and the Comptroller each have their own rules on how long to keep records, so check the agency page for each tax. Keep each record at least as long as the agency requires. ## What are common mistakes with Texas business taxes? Four mistakes come up often: 1. Treating “no tax due” as “no filing.” The information report is still required. 2. Spending collected sales tax. That money belongs to the state, so move it to its own account when you collect it. 3. Missing the equipment on the property tax roll, or failing to protest a high value in the short window each spring. 4. Treating a worker as a contractor without checking the facts, which can create payroll tax problems later. Each of these is easier to fix early than late. A short review once a year, ideally in January, catches most of them. ## Next step If you want help with these filings, read about [small business accounting](https://wallacecpa.multisites.ai/services/small-business-accounting), call Wallace CPA, PLLC at (877) 682-1171, or send a note through the [contact form](https://wallacecpa.multisites.ai/contact). This page is general information. Talk to a CPA about your own situation before you file or pay anything. ## Frequently asked questions ### Does Texas have a state income tax? No. The Texas Comptroller states that Texas has no state income tax. Businesses still pay federal income tax and several Texas taxes, such as franchise tax and sales tax. ### Does every Texas business file a franchise tax report? Most LLCs and corporations do. Sole proprietorships are not subject to the tax, except single member LLCs. A business at or below the no tax due threshold still files an information report. ### Who sets my business property tax value? The county appraisal district sets the value. Local taxing units then set the rates. You can protest a value with the appraisal district. ### Where do I find the sales tax rate for my address? The Comptroller offers a Sales Tax Rate Locator on its sales tax page. The combined rate cannot go above 8.25 percent. ### Can a CPA file these reports for me? Ask the office. Wallace CPA can tell you which of these tasks it can take on for your business. Your own situation decides what you owe. ## Terms on this page - [Property tax protest](https://wallacecpa.multisites.ai/glossary/property-tax-protest) - [Texas franchise tax](https://wallacecpa.multisites.ai/glossary/texas-franchise-tax) - [Appraisal district](https://wallacecpa.multisites.ai/glossary/appraisal-district) - [No tax due report](https://wallacecpa.multisites.ai/glossary/no-tax-due-report) - [Sales and use tax](https://wallacecpa.multisites.ai/glossary/sales-and-use-tax) - [Form 1099-NEC](https://wallacecpa.multisites.ai/glossary/form-1099-nec) - [Payroll tax](https://wallacecpa.multisites.ai/glossary/payroll-tax) - [Form 941](https://wallacecpa.multisites.ai/glossary/form-941) - [Form W-2](https://wallacecpa.multisites.ai/glossary/form-w-2) - [Form W-9](https://wallacecpa.multisites.ai/glossary/form-w-9) ## Sources 1. [Texas Comptroller, Franchise Tax](https://comptroller.texas.gov/taxes/franchise/) 2. [Texas Comptroller, Franchise Tax Extensions of Time to File](https://comptroller.texas.gov/taxes/franchise/filing-extensions.php) 3. [Texas Comptroller, Franchise Tax Notices](https://comptroller.texas.gov/taxes/franchise/notices.php) 4. [Texas Comptroller, Franchise Tax Report Forms for 2026](https://comptroller.texas.gov/taxes/franchise/forms/2026-franchise.php) 5. [Texas Comptroller, Franchise Tax Overview](https://comptroller.texas.gov/taxes/publications/98-806.php) 6. [Texas Comptroller, Sales and Use Tax](https://comptroller.texas.gov/taxes/sales/) 7. [Texas Comptroller, Property Tax Exemptions](https://comptroller.texas.gov/taxes/property-tax/exemptions/) 8. [Tarrant Appraisal District, Property Tax Protest and Appeal Procedures](https://www.tad.org/tadqr01) 9. [IRS, Employment tax due dates](https://www.irs.gov/businesses/small-businesses-self-employed/employment-tax-due-dates) 10. [Texas Comptroller, Texas is open for small business](https://comptroller.texas.gov/economy/fiscal-notes/industry/2025/small-biz-info/) Written by Wallace CPA and checked against the sources above on October 21, 2026. Tax rules and dates change, so check the linked page before you act. General information, not advice for your situation. ## Keep reading - [Texas franchise tax: who files, when, and what no tax due meansThe Texas franchise tax is a business tax on entities formed in or doing business in Texas. The report is due May 15 each year.](https://wallacecpa.multisites.ai/guides/texas-franchise-tax) - [Got an IRS notice? How to read it and what to do firstRead the whole notice, find its CP or LTR number, and note the reply date. A CP2000 is a proposal to change your return, not a bill.](https://wallacecpa.multisites.ai/guides/irs-notice-what-to-do) - [How to protest your property tax value in Tarrant and Denton countiesIn Tarrant and Denton counties, you protest your property value with your county appraisal district.](https://wallacecpa.multisites.ai/guides/property-tax-protest-tarrant-denton) - [Starting a business in Texas: entity, EIN, franchise tax and sales taxTo start a business in Texas, choose a structure, file with the Texas Secretary of State if the structure requires it, get a free EIN from the IRS, and...](https://wallacecpa.multisites.ai/guides/starting-a-business-in-texas) - [Small business bookkeeping setup and a monthly routineStart with a separate business bank account, a simple chart of accounts and one place for receipts.](https://wallacecpa.multisites.ai/guides/small-business-bookkeeping-routine) - [The small business tax and bookkeeping year, month by monthA small business tax year has fixed dates for returns, estimated tax, payroll reports and Texas franchise and sales tax.](https://wallacecpa.multisites.ai/guides/small-business-tax-calendar) ## Talk to Wallace CPA Call the Southlake office and say what you need: a return, an IRS letter, your books or a new business. Have the notice or last year's return nearby if you have one. [Call (877) 682-1171](tel:+1-877-682-1171)[Send a message](https://wallacecpa.multisites.ai/contact) 180 State Street, Suite 225, Southlake, TX 76092