As Texas has no net corporate or personal income tax, the Texas Franchise Tax is our state’s primary tax on businesses. Fortunately, the No Tax Due Threshold, currently set at $2,470,000, prevents most small companies (like LLCs) from having to pay any franchise tax.
As of 2024, businesses under the tax threshold no longer need to file a No Tax Due Report. Instead, LLCs and corporations making less than $2.47 million just need to file a Public Information Report. The due date is May 15, and there’s no filing fee. However, you may be charged a late fee if you miss the due date.
If you think this deadline might slip under your radar—or you’d just rather pass on the paperwork to someone else—hire Independent Texas! Our Texas registered agent service includes free due date tracking and reminders, and you can add our Public Information Report service to any of our other business services at checkout. (Click on “About Our Texas Franchise Tax Report Service” in the guide below to learn more).
DIY-ers, keep reading—this guide covers everything you need to know about completing the Texas Franchise Tax Report on your own.
The Texas Franchise Tax is an annual business privilege tax processed by the Texas Comptroller of Public Accounts. Essentially, it’s a tax levied on business owners in exchange for the opportunity to do business in Texas. Here's what you should know about it.
Sole proprietorships and general partnerships are not subject to the franchise tax (or reporting requirements), as these business types don’t provide any liability protection to their owners.
“Passive entities” (businesses that derive income only from passive sources like net capital gains or dividends), real estate investment trusts (REITs) and certain insurance organizations don’t have any franchise tax obligations either. For a complete list, see the section titled “Entities Not Subject to Franchise Tax” on the Franchise Tax Overview page of the Comptroller’s website.
If your company’s annual revenue is $20 million or less, you can use the EZ Computation method to file your tax return. This method applies a tax rate of .331 percent to all Texas-based earnings.
If any of the following are true, your business doesn’t owe franchise tax and doesn’t need to file the Texas franchise tax report:
If your company doesn’t meet at least one of the criteria above (and it’s not a sole proprietorship or general partnership), then franchise tax is owed.
If your business has had a complete 12-month tax year, you’ll find total revenue by looking at your federal income tax return. Businesses less than 12 months old will need to find their total revenue—then “annualize” it—to determine their tax liability.
Here’s how to file a Franchise Tax Report:
Once you’ve done this, you can complete the online Franchise Tax Accountability Questionnaire in your account. The questionnaire serves two purposes: it helps the Texas Comptroller determine your business’s franchise tax obligations, and it gives you a chance to update the mailing address the Comptroller has on file for your business (if you wish to do so).
Please note that once your Texas entity has been approved, the franchise tax questionnaire needs to be submitted within 30 days.
Once you’ve finished these initial steps, the Texas franchise tax forms you use and the information you must provide depends on whether or not you owe a franchise tax payment.
If You Don’t Owe:
If your business does not owe franchise tax, you’ll only need to file a Public Information Report (Form 05-102).
If You Do Owe:
There are a few different ways you can file your Franchise Tax Report and pay your tax bill. With many different deductions to choose from, the process can get complex, and you may want to enlist the help of a tax professional.
To calculate your payment, you need to choose the EZ Computation Method OR select a deduction. If your annualized business revenue is at or below $20 million, you can use the EZ Computation Report to calculate your franchise tax bill. This will give you a tax rate of .331% on your Texas gross receipts.
Both the EZ-Computation and Long Form reports can be filed electronically, by mail or through approved tax preparation software providers. All forms submitted by mail should be sent to:
There are a number of different fees and penalties your business may be subject to if you fail to submit your Texas Franchise Tax Report by the deadline.
Regardless of whether a business owes franchise tax, business owners are charged a $50 fee for submitting reports after the due date.
Additionally, if your business does owe a franchise tax payment, and your payment is 1-30 days late, a fine will be assessed in the amount of 5% of your total tax due. For reports received more than 30 days past the deadline, the penalty jumps to 10%.
If the Comptroller’s office does not receive your franchise tax report (and payment, if you owe one) within 45 days of the deadline, they are required by law to forfeit your business’s right to transact business in Texas. This forfeiture is essentially a loss of corporate liability protection: business owners will become liable for the debts of the business, and the entity will not be permitted to defend itself in a court of law.
If a business’s franchise tax report is overdue by 120 days or more, the Texas Secretary of State may terminate the business’s registration in Texas.
The best way to avoid administrative and financial headaches is to file your franchise tax report on time (or better yet, early) every year. You can enlist us to help you stay on top of due dates—our registered agent service includes helpful reminders about your upcoming franchise tax report.
First and second extensions are available for taxpayers who need extra time to submit their franchise tax reports. Note—they do not extend payment due dates.
The first extension gives taxpayers until August 15 to submit their franchise tax reports. If the business owner is unable to meet this August deadline, they can request a second extension, which moves the deadline to November 15. Extensions are requested using Texas Form 05-164. Keep in mind that in order for an extension request to be granted, it needs to be submitted or postmarked on or before the due date in question, and 90 percent of the tax due must be paid along with the extension request.
While we’re not a tax preparation service, Independent Texas Registered Agent can provide expert, timely filing of your business’s Public Information Report for a flat fee of $100. Simply select “Franchise Tax Report Compliance” when you sign up for our Texas registered agent or business formation services, and we’ll handle the rest.
Before your annual report is due, we will send a notice to your client account reminding you of the upcoming due date. We’ll automatically file the franchise tax report for you. Our filing service ensures that your business doesn’t miss this all-important deadline, and also helps everyone in your company to maintain their privacy. Members, directors, officers—we leave everyone’s personal addresses off of the Public Information Report, populating our Texas business address in every address field instead.
If you add our franchise tax compliance service at checkout and decide to go the DIY route later, that’s fine too. You can cancel our franchise tax filing service at any time with one click in your online account.
The Texas Franchise Tax is complex, but we’re here to help. Here are the most common questions we receive about the franchise tax.
As you’ve probably deduced from this guide, filing your annual franchise tax report—on time and correctly—is a pretty big deal. But it’s also something that could slip your mind in the day-to-day rush of running your company.
When you hire Independent Texas to form your Texas company or serve as your registered agent, we keep your state correspondence organized, send you multiple reminders ahead of the franchise tax due date, and provide affordable franchise report filing service.
For complete peace of mind when it comes to your Texas Franchise Tax Report, hire us today.