Texas franchise tax: who files, when, and what no tax due means

This guide is general information, not advice for your business. The figures are the Texas Comptroller’s, checked on October 21, 2026. They apply to the 2026 report and, where stated, 2027. They change, so read the Comptroller page for the year you file.

What is the Texas franchise tax?

It is a business tax charged for the privilege of operating in Texas. The Comptroller describes it as “a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas.” It is not an income tax and it is not a fee for a franchise in the sense of a restaurant chain.

The tax is based on a margin, which starts with revenue. A business at a low revenue level owes nothing. That fact is why many small owners hear “franchise tax” and assume it does not apply to them. They are partly right: the tax due may be zero. The filing is still required.

For the larger picture of Texas taxes, see the Texas business taxes guide. The glossary has a short entry on the Texas franchise tax.

Who has to file the report?

Taxable entities file. These include corporations, S corporations, limited liability companies, and most partnerships and other legal entities formed in Texas or doing business in Texas. An LLC is a taxable entity.

Sole proprietorships are not subject to the tax. The Comptroller’s overview lists “sole proprietorships (except for single member LLCs)” among the entities not subject. If you operate alone and have not formed an entity, you are likely outside the tax. If you formed a one-person LLC, you are inside it, even though the LLC may report on your personal federal return.

If you are choosing a structure, the guide on S corporation, LLC or sole proprietor in Texas compares the effects. The steps to form an entity are in the guide on starting a business in Texas.

When is the report due?

The report is due May 15 each year. The Comptroller says: “If May 15 falls on a weekend or holiday, the due date will be the next business day.” In 2027, May 15 is a Saturday. The due date for that year moves to Monday, May 17.

The report covers the accounting year that ended in the prior year. The Comptroller’s help page tells filers to enter “the last accounting period end date for federal income tax purposes in the year before the year the report is originally due.” So the report due in May 2027 uses an accounting year that ended in 2026.

Our tax due dates page lists the Texas date next to the federal dates. Put May 15 on the calendar in January. A report filed in the first week of May leaves room to fix a mistake.

How do I request an extension?

An extension moves the due date to November 15. The Comptroller says “Nov. 15 is the extended due date.” The extension is granted when the Comptroller receives a timely online extension payment or request on a form it provides. Timely means on or before the original due date.

An extension has a payment rule. The Comptroller states that “Generally, for an extension to be valid, 100 percent of the tax paid in the prior year, or 90 percent of the tax that will be due with the current year’s report, must be paid on or before the original due date of the report.” If you pay too little, penalty and interest apply to the shortfall. Some rules differ for new entities and for entities in a combined group.

If your business is at or below the no tax due threshold, you owe no tax, and there is no payment to make with an extension. Still, file the information report by the due date, or ask for an extension of it.

What does no tax due mean?

It means your revenue is at or below the threshold, so the tax is zero. The Comptroller sets the no tax due threshold at $2.65 million for the 2026 report. The same figure is listed for 2027. The threshold was $2.47 million for 2024 and 2025 reports.

The rule changed for reports due on or after January 1, 2024. An entity at or below the threshold no longer files a No Tax Due Report. The Comptroller states: “However, the entity is still required to file a Public Information Report (PIR) or an Ownership Information Report (OIR).” Which one depends on the entity. The Comptroller’s forms page explains which one fits each entity type.

Our post on the no tax due report in Texas walks through an example. The glossary also defines the no tax due report.

What forms and rates apply above the threshold?

Above the threshold, you file either the E-Z Computation or the Long Form. The E-Z Computation is open to an entity with annualized total revenue of $20 million or less. The Comptroller says an entity above the threshold that does not elect the E-Z Computation “must file the Long Form report.”

The rates for 2026 and 2027 reports are 0.75 percent for most entities and 0.375 percent for retail or wholesale. The E-Z Computation rate is 0.331 percent, the Comptroller lists. The tax is charged on margin, not on revenue. Margin is a measure of revenue after allowed subtractions, and the Comptroller’s instructions explain each choice. The table also lists a compensation deduction limit of $480,000 for 2026 and 2027.

An entity above the threshold should work with its books and a CPA. The margin choice can change the tax. The small business accounting service page lists the work Wallace CPA, PLLC does with business records.

What happens if I get a Comptroller notice?

Read it and match the form number. The Comptroller issues notices for missing reports, unpaid balances and missing information reports. Common ones are Form 05-211, the Notice of Intent to Forfeit Right to Transact Business, and Form 05-213, the Notice of Forfeiture of Registration.

The notice page offers a quick path. Since the 2024 changes, “If your annualized total revenue is at or below the no tax due threshold for the report year, you only need to file a Public Information Report (PIR) or Ownership Information Report (OIR) to resolve your issue.” The Comptroller also says there is no $50 penalty for late filing a PIR or OIR.

If you owe tax, the notice says what to file and pay. File the report, pay the tax, and pay any penalty and interest. Forfeiture is the outcome to avoid. The Comptroller states that an entity registered with the Secretary of State must satisfy all state tax filing requirements before it can reinstate, terminate, merge or convert.

What should I do next?

Do these steps in order.

1. Find out whether you are a taxable entity. Check your formation papers.
2. Look up your revenue for the accounting year that ended last year.
3. Compare it with the threshold for the report year.
4. Gather your Texas taxpayer number and your owner or officer details.
5. File on or before the due date, or request an extension with the right payment.
6. Save a copy of what you filed and the confirmation.

Next step

For help with your records before a filing, read about small business accounting, call Wallace CPA, PLLC at (877) 682-1171, or use the contact form. This guide is general information. Talk to a CPA about your own situation before you file or pay.