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Business Formation Guide
costUpdated 2026-03-31

Does Texas Have a Franchise Tax for LLCs?

Yes. Texas imposes a franchise tax on LLCs under Tex. Tax Code Ch. 171. The standard rate is 0.75% of taxable margin, with reduced rates for retail/wholesale (0.375%) and an EZ computation option (0.331%). No tax is due if annualized total revenue does not exceed $2,650,000 (2026 threshold). The franchise tax is filed annually with the Texas Comptroller of Public Accounts by May 15.

Tax Rates and Thresholds

Texas applies three franchise tax rates depending on your LLC's business type. The standard rate is 0.75% of taxable margin. Retail and wholesale businesses qualify for a reduced 0.375% rate. An optional EZ computation method applies 0.331% for simplified calculations.

LLCs with annualized total revenue of $2,650,000 or less (2026 threshold) owe no franchise tax. This threshold adjusts annually. Track your revenue carefully—exceeding the threshold triggers tax obligations.

Filing Requirements

File your annual Public Information Report (PIR) or Ownership Information Report (OIR) with the Texas Comptroller by May 15 each year under Tex. Tax Code § 171.203. The filing is free and available online at comptroller.texas.gov. Include your principal office address, principal place of business, manager/member names and addresses, SOS file number, and registered agent information.

Late Filing Penalties

Missing the May 15 deadline incurs a $50 penalty per late report. Additional penalties apply based on payment timing: 5% if paid 1–30 days late, and 10% if over 30 days late. Interest accrues after 61 days. There is no grace period.

Consequences of Non-Compliance

Failure to file or pay results in forfeiture of your LLC's right to transact business. The Comptroller may forfeit your entity, and the Secretary of State can involuntarily terminate your LLC following tax forfeiture.

Reinstatement requires filing all delinquent reports, paying all taxes, penalties, and interest, obtaining a tax clearance from the Comptroller, and filing a reinstatement application with the Secretary of State for a $75 fee.

Next Steps

  1. Register with the Texas Comptroller for franchise tax purposes at comptroller.texas.gov.
  2. Mark your calendar for May 15 annually to file the required report.
  3. Calculate your taxable margin and applicable rate, or consult a tax professional.
  4. File online to avoid penalties and maintain good standing.

This is general information, not legal advice.