Texas Franchise Tax for Small Businesses: 2026 Threshold

If your Texas LLC or corporation had less than $2,650,000 in total revenue, you owe no Texas franchise tax on the report due in 2026 or 2027, and you no longer file a No Tax Due Report. You still file one thing every year by May 15: a Public Information Report or an Ownership Information Report. Above the threshold, the tax is 0.75% of a margin figure for most service businesses (0.375% for retail and wholesale), or 0.331% of revenue under the EZ computation if your revenue is $20 million or less.

Who is subject to it

The franchise tax applies to entities with liability protection: LLCs, corporations, partnerships with limited liability, and similar. It does not apply to a sole proprietor who never formed an entity.

The case that surprises owners is the single-member LLC. For federal income tax, the IRS ignores it and the profit lands on your Schedule C. For Texas, it is an entity, so it files every year even when it owes nothing.

The no-tax-due threshold

"Total revenue" is the measure, not profit. The report starts from the revenue lines of your federal income tax return and adjusts them by Texas rules. Your CPA computes the exact figure; what you need to know in January is roughly where last year landed against $2.65 million.

What you file under the threshold

Before the 2024 report year, a business under the threshold filed a No Tax Due Report. The Comptroller discontinued it. Now an entity at or below the threshold files no franchise tax report at all, but it must still file:

• Form 05-102, Public Information Report, for corporations and LLCs, or
• Form 05-167, Ownership Information Report, for other taxable entities.

They are short, but they are not optional. An entity that does not file one can lose its right to transact business in Texas. For a company that owes no tax, that is the entire risk of the franchise tax, and it comes from skipping a short form.

Rates above the threshold

Taxable margin is total revenue minus the largest of several allowed deductions, and choosing among them is your CPA's work. The EZ computation skips that and taxes revenue at a lower rate. Which one costs less depends on your margin, so ask your CPA to run both.

A worked example: a six-truck HVAC shop

Year one: $2.3 million in total revenue. Under $2,650,000. The shop owes no franchise tax and files no franchise tax report. It files its Public Information Report by May 15. Done.

Year three: $3.1 million. Over the threshold, so the shop owes tax. Under the EZ computation, if all its revenue is Texas revenue, that is $3,100,000 × 0.331% = $10,261. Under the standard computation, it is 0.75% of taxable margin, which is lower than total revenue by whichever deduction the CPA chooses; for a shop with large cost of goods sold or payroll, that can come in under the EZ figure. The point for the owner is planning: the year revenue crosses $2.65 million, a five-figure tax bill appears that did not exist the year before.

That is worth putting in the cash plan in December, not discovering in May. For the federal side of the same planning, see how much to set aside for taxes.

Deadlines and extensions

The report is due May 15. In 2027, May 15 falls on a Saturday; applying the Comptroller's rule that a due date on a weekend moves to the next business day, the 2027 report is due Monday, May 17, 2027. The Comptroller had not published its 2027 calendar when this was written, so confirm the date.

An extension gives more time to file. It is not more time to pay.

The other Texas date: April 15

If your business owns equipment, vehicles, tools or inventory, there is a second Texas deadline a month earlier: the business personal property rendition, due April 15. Starting in 2026, the first $125,000 of that property is exempt, which takes most small shops out of it after a one-time certification. See the Texas rendition and the $125,000 exemption.

For the rest of the year-end list, see what your CPA needs at year end, and for the January 1099s, the 1099 threshold for 2026. Quarterly federal estimates are in quarterly estimated taxes.

How Poof handles Texas

For a business with a Texas address, Poof's Taxes tab checks last year's revenue from the books against the no-tax-due threshold and says which report to file by the May deadline, and it lists what you owned on January 1 against the $125,000 property exemption, with a CSV for the appraisal district. Both deadlines sit on the tax calendar with who files them. Poof prepares and reminds; it never files, pays, or moves money.

General information, not tax advice; your CPA has the final word.

*Written by Austin Semple, a former controller: three years in audit, seven running the books for small businesses, and the founder of Poof. Poof checks a Texas business's revenue against the franchise tax threshold every year from the same books it closes each month. Start a 30-day trial, no card required.*