Built from official Secretary of State sources · Updated April 2026 · Instant PDF download

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TEXAS

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Texas LLC tax filing deadlines and franchise tax thresholds for 2026

Texas doesn’t call it an annual report — they call it a franchise tax report, and it works differently from what most states require. Here’s every deadline and threshold you need to know for 2026.

Does Texas require an annual report for LLCs? Not in the traditional sense. Texas does not have a standard annual report filed with the Secretary of State like most states. Instead, Texas requires every LLC and corporation to file an annual franchise tax report with the Texas Comptroller of Public Accounts. This report serves a similar function to an annual report but includes tax calculations.

When is the Texas franchise tax report due? The franchise tax report is due May 15 every year, with no exceptions. If May 15 falls on a weekend or holiday, the deadline extends to the next business day. Extensions are available — you can request an automatic extension to November 15 by filing Form 05-164, but you must still pay any estimated tax due by May 15 to avoid penalties.

What is the no-tax-due threshold for 2026? For reports due in 2026, the no-tax-due threshold is $2.65 million in total revenue. If your LLC’s total revenue is below this threshold, you owe no franchise tax — but you must still file a No Tax Due Report (Form 05-163). Filing the report is mandatory regardless of whether you owe tax. Failure to file, even when you owe $0, can result in forfeiture.

What are the Texas franchise tax rates? For LLCs above the no-tax-due threshold, the franchise tax rates for 2026 are 0.375% for retail and wholesale businesses and 0.75% for all other businesses, calculated on your taxable margin (which is generally total revenue minus the greater of cost of goods sold, compensation, 30% of total revenue, or $1 million). For businesses using the compensation method, the per-person deduction is capped at $480,000 for 2026 reports (adjusted biennially for inflation per Texas Tax Code § 171.006).

What happens if you don’t file? Texas will forfeit your LLC’s right to transact business in the state. This is more severe than most states’ penalties — forfeiture means you cannot enforce contracts, cannot file lawsuits, and your officers and directors become personally liable for business debts incurred after the forfeiture date. Reinstatement requires filing all past-due reports and paying all outstanding taxes and penalties.

Other Texas compliance deadlines to know: Texas requires registration for sales and use tax with the Comptroller’s office if you sell taxable goods or services. Employers must register for unemployment insurance with the Texas Workforce Commission. And while Texas has no state income tax on individuals, the franchise tax on businesses is the state’s primary mechanism for taxing business activity.

What catches Texas business owners off guard

Texas markets itself as a business-friendly state — no personal income tax, relatively easy formation, and a pro-business regulatory environment. What new owners don’t realize until it’s too late is that Texas has a franchise tax that applies to every LLC and corporation regardless of profit, some of the highest property tax rates in the nation (averaging 1.8% with no cap), and a franchise tax report that must be filed by May 15 every year even if you owe zero tax.

That last point is what gets the most people. If your total revenue is under $2.65 million, you owe no franchise tax — but you must still file a No Tax Due Report. Fail to file and Texas will forfeit your right to transact business in the state. That means you can’t enforce contracts, can’t file lawsuits, and your personal liability protection evaporates. Reinstatement requires filing all past-due reports and paying accumulated penalties, which can take weeks and cost hundreds of dollars.

Texas is also the only state in the country where workers’ compensation insurance is truly voluntary — which sounds like a benefit until you realize that opting out means employees can sue you directly for workplace injuries with no cap on damages.

Texas Business Compliance

Quick-Start Teaser

Avoid the biggest traps new owners face – from my 27-page full guide

PHASE 1: BUSINESS PLANNING & LEGAL STRUCTURE

Validate idea, choose entity (LLC/S-Corp/etc.), register with Secretary of State, get EIN, DBA, operating agreement/bylaws.

■ TRAP ALERT: Assuming ‘no income tax’ means no business taxes

→ Texas has the franchise (margin) tax — 0.375%-0.75% of total revenue for businesses over $2.65M — plus property tax, and some of the highest commercial insurance costs in the nation.

PHASE 2: STATE & LOCAL REGISTRATIONS

Register for state tax accounts, sales/gross receipts tax, local licenses and permits, unemployment insurance, new hire reporting. penalties)

■ TRAP ALERT: Missing the franchise tax report (even $0-revenue businesses must file an EZ form or face → TX franchise tax is based on REVENUE not profit — a $3M revenue business with slim margins still owes thousands.

PHASE 3: FEDERAL COMPLIANCE

Check federal licenses, set up payroll taxes (EFTPS), I-9 for hires, workplace safety (OSHA/state plan).

■ TRAP ALERT: Commingling personal and business funds

→ Pierces the corporate veil and exposes your personal assets to lawsuits and debts.

PHASE 4: INSURANCE & RISK MANAGEMENT

General liability, workers’ comp (required in most states), state-mandated benefits, standard contracts/agreements.

■ TRAP ALERT: Not understanding Texas’s voluntary workers’ comp system (only state where WC is truly optional) → TX is the ONLY state where workers’ comp is voluntary — but opting out means employees can sue you directly for workplace injuries.

PHASE 5: FINANCIAL SETUP & TAX COMPLIANCE

Open dedicated business bank account, set up bookkeeping/accounting systems.

■ TRAP ALERT: Not budgeting for Texas’s high property taxes (avg 1.8% — among highest in nation, no cap) → Property tax is TX’s primary revenue source — commercial property taxes can be $20K-$100K+ annually and rise with valuations.

PHASE 6: OPERATIONS & ONGOING COMPLIANCE

Navigate ongoing taxes/regulations, maintain compliance calendar, annual filings.

■ TRAP ALERT: Missing ongoing filings or poor record-keeping → Escalating penalties, audits, or forced dissolution.

Texas franchise tax report essentials

The Texas franchise tax applies to all taxable entities formed, organized, or doing business in Texas. The no-tax-due threshold for reports due in 2026 is $2.65 million in total revenue. Even if you fall below this threshold, you must file a No Tax Due Report to remain in good standing.

Consequences of missed filings in Texas

Texas takes franchise tax compliance seriously. Failure to file can result in forfeiture of your right to transact business in Texas, tax liens on business and personal property, personal liability for business debts incurred after forfeiture, and inability to maintain a lawsuit in Texas courts until compliance is restored.

Operating in nearby states? Texas franchise tax rules don’t apply across state lines. See our guides for Oklahoma, Louisiana, New Mexico, and Arkansas.

The complete Texas compliance package

Our full Texas compliance package covers every detail — franchise tax calculation worksheets, filing instructions, deadline calendars, penalty schedules, and reinstatement procedures.

Don't miss the May 15 Texas franchise tax report deadline in 2026 — our complete checklist shows you exactly what to file and how to stay compliant for $37 instant download.

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