Texas Corporation Taxes

Texas corporations can face both entity-level income tax and separate annual business taxes, depending on whether the company is treated as a C corporation, an S corporation, or a corporation subject to a separate franchise or margin-tax regime. This guide is rendered from the source-backed tax profile so future updates stay tied to official state tax sources.

At a Glance

Topic	Current treatment
C corporation tax	None listed
S corporation tax	See official guidance
Minimum tax	None listed
Separate business taxes	Yes
Sales tax	Yes — 6.25%

Corporate Income Tax

The current profile does not list a general state corporate income tax for Texas corporations.

Texas does not impose a traditional corporate income tax; the main entity-level regime is the franchise tax.

If your company elected S corporation treatment federally, do not assume the state follows federal law automatically. The state profile is the right place to confirm whether the state recognizes the election and whether it still imposes a separate entity-level tax.

Franchise, Margin, Gross Receipts, and Other Business Taxes

The current profile shows the following business-tax items:

Margin Tax (all businesses): Texas franchise tax applies to taxable margin at the current statewide rates, with a no-tax-due threshold currently shown at $2,650,000 in official small-business guidance. Due: May 15.

These taxes can apply in addition to corporate income tax. That distinction matters because a corporation may owe a minimum, franchise, or margin-style tax even in a low-profit year.

Sales Tax for Corporations

Texas has a base statewide sales tax rate of 6.25%. Local jurisdictions can add up to 2%, for an 8.25% combined maximum.

If the corporation sells taxable goods or taxable services, use Texas Comptroller of Public Accounts for registration and rate verification. The current profile points to: https://comptroller.texas.gov/taxes/sales/.

Filing Planning and Entity Choice

The state tax profile is also useful for entity-choice planning. If the S corporation rate, minimum tax, or PTE election rules are materially different from the C corporation rules, that can change whether an S election makes sense. The right comparison is not just federal tax savings; it is the full state stack of income tax, minimum tax, franchise tax, sales tax, and annual compliance cost.

State-Specific Quirks

Margin not income: Texas entity tax content should emphasize that the franchise tax is a margin-based system, not a conventional corporate income tax.

Bottom Line

For a Texas corporation, the main compliance risk is overlooking the extra layer beyond ordinary corporate income tax. Check the minimum tax, the separate business-tax regime, and the state's sales-tax registration rules every time the profile is refreshed.