Texas franchise tax is an annual state business tax that every Texas LLC must file by May 15 — even if the business owes $0. For 2026, LLCs with revenue under $2,650,000 owe nothing but still must submit the Public Information Report or face a $50 penalty and risk losing their right to operate. Here's exactly what franchise tax is, who owes it, and how the math works.
What Texas franchise tax actually is
Despite the name, Texas franchise tax has nothing to do with franchise businesses or buying into a franchise system. It's a privilege tax — a fee for the privilege of operating a business entity in Texas.
Texas franchise tax is levied on the total revenue of a business, not on profit. Whether your LLC made $5,000 or $500,000 in profit, franchise tax is calculated as a percentage of gross revenue above the no-tax-due threshold. A highly profitable LLC with low revenue pays less franchise tax than a lower-margin business with high turnover.
The Texas Comptroller of Public Accounts administers the tax, which is formally known as the Margin Tax because the 2008 legislation that created it calculated the tax on "taxable margin" — a figure derived from revenue using one of several allowed deductions. Most small businesses now use a simplified calculation.
Common mistake: Many new LLC owners assume franchise tax only applies if their business is profitable. It does not. The tax is revenue-based, and the filing obligation exists even if your LLC had zero income during the year.
Who must file Texas franchise tax
Texas franchise tax applies to businesses organized in Texas or doing business in Texas:
- Texas LLCs — single-member and multi-member
- Corporations (C corps and S corps)
- Limited partnerships (LPs) and limited liability partnerships (LLPs)
- Professional associations (PAs)
- Business trusts and banking institutions
- Out-of-state entities with Texas nexus — including foreign LLCs registered to do business here
Notable exceptions:
- Sole proprietorships (not organized as LLCs)
- General partnerships without limited liability features
- Certain nonprofits and passive entities that meet specific Comptroller criteria
If your business is an LLC — regardless of how the IRS taxes it (disregarded entity, partnership, or S corp election) — you almost certainly have a franchise tax filing obligation.
What the 2026 tax rates and threshold mean
The 2026 franchise tax year covers revenue from your LLC's prior fiscal or calendar year (typically January 1 – December 31, 2025).
No-tax-due threshold: $2,650,000 in annualized total revenue. If your LLC's gross receipts fall below this amount, you owe $0 in franchise tax.
Tax rates for revenue above the threshold:
| Business type | Tax rate |
|---|---|
| Retail or wholesale | 0.375% of taxable margin |
| All other businesses | 0.75% of taxable margin |
"Taxable margin" is calculated as total revenue minus the greatest of: (a) cost of goods sold, (b) compensation paid to officers and employees, or (c) 30% of total revenue. Most small LLCs use the 30% deduction because it's straightforward.
Example: An LLC with $3,000,000 in revenue (non-retail) calculates taxable margin as $3,000,000 × 70% = $2,100,000, then applies 0.75% = $15,750 in franchise tax.
For LLCs with revenue between $2.65M and $20M, the EZ computation method applies 0.331% directly to total revenue without any deduction. See our Texas franchise tax EZ computation guide for the step-by-step process.
What forms Texas LLCs file
Which form you file depends on your LLC's revenue level:
| Revenue | Form required |
|---|---|
| Below $2,650,000 | Form 05-102 (Public Information Report only — free) |
| $2,650,001–$20,000,000 | Form 05-169 (EZ Computation) + Form 05-102 (PIR) |
| Above $20,000,000 | Form 05-158-A/B (Long Form) + Form 05-102 (PIR) |
The Public Information Report (Form 05-102) is required for all Texas LLCs regardless of revenue. It captures your LLC's registered agent, principal office address, and officer or member information. The Comptroller forwards this data to the Secretary of State to keep your entity records current.
Common mistake: Many owners believe that owing $0 means filing nothing. The old No Tax Due Report (Form 05-163) was discontinued in 2024. LLCs below the threshold now file only the PIR — no computation form needed. Searching for the old form online often leads to outdated instructions; the form no longer exists.
How to file — the WebFile basics
All franchise tax filings go through the Texas Comptroller's WebFile system at comptroller.texas.gov/taxes/franchise/.
What you need before you log in:
- Your Texas taxpayer number (11-digit number from the Comptroller — different from your IRS EIN)
- Your WebFile Access Code (mailed to your registered agent annually; request a replacement at the Comptroller's website if lost)
- Revenue figures from your 2025 fiscal year
- Your LLC's principal office address and registered agent details
- Names and addresses of all members, managers, or officers as of the filing date
Filing steps:
- Go to comptroller.texas.gov/taxes/franchise/ and click "File and Pay Franchise Tax."
- Log in with your taxpayer number and WebFile Access Code (create an account if this is your first time).
- If revenue is below $2,650,000: select the Public Information Report, complete all fields, and submit at no cost.
- If revenue is above $2,650,000: select the appropriate computation form (05-169 or 05-158), enter your revenue figures, complete the PIR section, and pay any tax owed.
- Save your confirmation number as proof of timely filing.
This process takes about 10–20 minutes for most LLCs. For a full field-by-field walkthrough of the portal, see our Texas franchise tax WebFile tutorial.
What happens if you miss the May 15 deadline
Missing the filing deadline triggers penalties starting immediately on May 16:
- $50 late fee — assessed the day after May 15, even when no tax is owed
- 5% penalty on any tax owed if filed within 1–30 days late
- 10% penalty on any tax owed if filed more than 30 days late
- Interest accrues on unpaid tax from the due date
If the Comptroller doesn't receive a filing, they can eventually forfeit your LLC's right to transact business in Texas. After forfeiture, under Texas Tax Code §§ 171.251, 171.252, and 171.255:
- Officers and members can be held personally liable for the LLC's debts
- The LLC cannot file lawsuits or enforce contracts in Texas courts
- The Secretary of State may ultimately dissolve the entity
If you've already missed a deadline, see our guide on what to do if your Texas LLC receives a forfeiture notice.
Quick reference
| Detail | Info |
|---|---|
| What | Texas franchise tax (Margin Tax) — annual state business privilege tax |
| Who | All Texas LLCs, corporations, LPs, LLPs, PAs; foreign entities with Texas nexus |
| When | May 15 annually |
| Where | comptroller.texas.gov/taxes/franchise/ |
| No-tax-due threshold (2026) | $2,650,000 annualized total revenue |
| Rate (retail/wholesale) | 0.375% of taxable margin |
| Rate (all others) | 0.75% of taxable margin |
| Form (below threshold) | 05-102 (PIR only — free) |
| Form ($2.65M–$20M) | 05-169 (EZ Computation) + 05-102 |
| Form (above $20M) | 05-158-A/B (Long Form) + 05-102 |
| Late fee | $50 + 5–10% on any tax owed |
| Consequence of non-filing | LLC forfeiture; personal liability for members |
FAQ
What is Texas franchise tax?
Texas franchise tax is an annual state business tax imposed by the Texas Comptroller on LLCs, corporations, and most other taxable entities with a Texas presence. It's calculated as a percentage of total revenue — not profit — and every covered entity must file a report by May 15 each year, even if no tax is owed. For 2026, LLCs with revenue under $2,650,000 owe $0 but still must file the Public Information Report.
Do all Texas LLCs have to pay franchise tax?
All Texas LLCs must file a franchise tax report annually, but not all owe money. For 2026, LLCs with annualized total revenue under $2,650,000 owe $0 in franchise tax. These LLCs still must file the Public Information Report (Form 05-102) by May 15. Skipping the filing — even when no tax is owed — triggers a $50 penalty and can eventually lead to forfeiture of the LLC.
What is the Texas franchise tax rate in 2026?
The standard Texas franchise tax rate is 0.75% of taxable margin for most businesses. Retail and wholesale businesses qualify for a reduced rate of 0.375%. These rates apply only on revenue above the $2,650,000 no-tax-due threshold. LLCs with revenue below the threshold owe $0 regardless of their industry.
What happens if I don't file Texas franchise tax?
Missing the May 15 deadline triggers a $50 late fee immediately, plus 5% of any tax owed if filed within 30 days, or 10% if more than 30 days late. Continued non-filing can lead to forfeiture of your LLC's right to transact business in Texas. After forfeiture, members and officers can become personally liable for the LLC's debts under Texas Tax Code §§ 171.251–171.255.
What is the Texas franchise tax no-tax-due threshold for 2026?
For 2026, the no-tax-due threshold is $2,650,000 in annualized total revenue. LLCs with revenue below this amount owe $0 in franchise tax but must still file the Public Information Report by May 15. The Comptroller adjusts this threshold periodically — check comptroller.texas.gov/taxes/franchise/ each year for the current figure.
Not sure what else your Texas LLC owes?
Most business owners are surprised by how many filing obligations they have. Ortholo's free compliance checker shows you everything you owe, when it's due, and what happens if you miss it — personalized to your entity.
Last verified: 2026-05-18
Sources: Texas Comptroller — Franchise Tax | Texas Comptroller — PIR/OIR Filing Requirements | Texas Tax Code §§ 171.251–171.255