What the Texas Franchise Report Actually Is
Every Texas LLC, corporation, partnership, and most other entity types must file an annual Franchise Tax Report with the Texas Comptroller. The report is due by May 15 each year, covering the prior tax year. Texas is unique among large states in that the franchise tax functions as a "margin tax" rather than an income tax or annual report fee.
For most Texas small businesses, the franchise report is a no-tax-due filing. The state's no-tax-due threshold for 2026 is $2.47 million in annualized total revenue. Entities below the threshold file a "No Tax Due Report" (Form 05-163) confirming they owe zero franchise tax. Above the threshold, the calculation becomes more complex and the actual margin tax is owed.
Who must file
All entities chartered or organized in Texas, plus all out-of-state entities that registered to do business in Texas through foreign qualification, must file annually. This includes single-member LLCs that report on the owner's personal tax return federally, even though they may not file their own federal income tax return. The franchise report is a Texas-specific filing separate from any federal obligation.
Who is exempt from the report itself
A small number of entity types are exempt from the franchise tax entirely, including non-profits, sole proprietorships, general partnerships owned entirely by natural persons, and certain Texas-specific entities like rural electric cooperatives. The exemption list is narrow; if you operate an LLC, corporation, or limited partnership in Texas, you almost certainly must file.
The Three-Form Filing Structure
Texas Franchise Report: Which Form to File
| Annualized revenue | Tax form | PIR required? | Tax owed |
|---|---|---|---|
| $0, $2.47M | Form 05-163 (No Tax Due) | Yes (Form 05-102) | $0 |
| Above $2.47M | Form 05-158 (Long-Form) | Yes (Form 05-102) | Margin tax calculation |
Texas requires up to three forms depending on the entity's situation. Understanding which forms apply prevents under-filing and the resulting penalty assessments.
Form 05-163: No Tax Due Report
For entities with annualized total revenue at or below $2.47 million (the 2026 threshold), Form 05-163 is the simplest filing path. The form confirms total revenue is below the threshold and certifies the entity's tax liability is zero. Most small Texas businesses file Form 05-163 every year and pay no franchise tax. The form must still be filed even when zero tax is owed; failing to file triggers penalties.
Form 05-158 + Schedules: Long-Form Report
For entities with annualized total revenue above $2.47 million, the long-form franchise tax report applies. The margin tax is calculated as the lower of: (a) total revenue minus cost of goods sold, (b) total revenue minus compensation, (c) total revenue × 70%, or (d) total revenue minus $1 million. The result is multiplied by the franchise tax rate: 0.375% for retailers and wholesalers, 0.75% for most other businesses, with a 50% reduction for entities classified as primarily engaged in retail or wholesale trade.
Form 05-102: Public Information Report (PIR)
In addition to the tax report, every Texas LLC and corporation must file a Public Information Report (PIR) as part of the same May 15 filing. The PIR lists the entity's officers, directors, members, or managers. Texas LPs and LLPs file a Form 05-167 Ownership Information Report instead. Failing to file the PIR is treated as a separate violation from missing the franchise tax report; both forms must be submitted together.
The May 15 Deadline and the $50 Late Penalty
Pre-filing Checklist
- Confirm current officer/manager information matches state records
- Verify registered agent address matches the agent's current record
- Check filing fee amount against the state's current fee schedule
- Confirm prior-year obligations are clear (no outstanding reports)
- Verify entity status is active (not administratively dissolved)
- Set a calendar reminder for next year's deadline
May 15 is the firm deadline for the franchise report and the PIR. Texas does not align with the federal April 15 tax deadline; the franchise report is one month later. This is a common source of confusion for new Texas business owners.
Extension request
A six-month extension to November 15 can be requested by filing Form 05-164 by May 15. The extension requires an extension payment if any tax is expected to be owed (90% of the actual tax must be paid by May 15 to avoid underpayment penalties even with an extension). For no-tax-due filers, the extension is a routine administrative request with no payment requirement.
The $50 late penalty plus 5% per month
Missing the May 15 deadline (or the November 15 extended deadline) triggers a $50 late penalty plus a 5% penalty on the unpaid tax for each month the report is late, up to a maximum of 12 months. For a no-tax-due report, the penalty is the $50 flat fee but the comptroller may also forfeit the entity's right to transact business in Texas if the report remains unfiled for too long.
Forfeiture of right to transact business
If the franchise report remains unfiled and unpaid for an extended period, the Texas Comptroller can forfeit the entity's right to transact business in Texas. A forfeited entity cannot sue or defend itself in Texas courts and effectively loses its limited liability protection during the forfeiture period. Reinstating a forfeited entity requires filing all back reports, paying all back taxes, penalties, and interest, plus filing a Tax Clearance Letter from the Comptroller.
Common Texas Franchise Report Mistakes
The combination of franchise tax + PIR + state-specific deadline produces several recurring errors among Texas LLCs and corporations.
Mistake 1: Missing the PIR while paying the tax
Some Texas businesses correctly file Form 05-163 (No Tax Due) but forget the separate Public Information Report (Form 05-102). The Comptroller treats these as two filings, and missing the PIR can independently trigger forfeiture even when no tax is due. Always file both forms together.
Mistake 2: Using federal April 15 as the Texas deadline
New Texas LLC owners often assume Texas aligns with the federal tax deadline. Texas's May 15 deadline is one month later. Calendar reminders set for April 15 (the federal deadline) cause the franchise report to be missed by exactly 30 days, which triggers a one-month penalty assessment.
Mistake 3: Inflating revenue beyond the no-tax-due threshold
The $2.47 million threshold applies to annualized total revenue. For partial-year entities (formed mid-year), revenue is annualized by multiplying by (12 / months in operation). A new LLC formed in October with $750,000 in revenue would have annualized revenue of $3 million, putting it above the threshold and into the long-form filing. Many partial-year LLCs miss this annualization rule.
How to simplify Texas Franchise Filing
For most Texas LLCs, the franchise report is a routine annual task that takes 20-30 minutes if revenue records are clean. Three practices keep filing low-effort:
Practice 1: Pull revenue figures by April 15
Run the prior year's revenue summary by mid-April. If revenue is well under $2.47 million, you know you're filing the No Tax Due Report. If revenue is approaching the threshold, you have time to consult a CPA before May 15. This forecast also surfaces the PIR officer-update question while there is still time to confirm current officer names.
Practice 2: Maintain a current officer/manager list
The PIR requires current officer, director, member, or manager information. Companies that have not updated this list since formation often discover at filing time that a co-founder departed or a manager changed. Keep this list current alongside any corporate-resolution changes; the PIR becomes a non-issue if the underlying list is accurate.
Practice 3: File electronically through Webfile
The Texas Comptroller's Webfile system allows electronic filing for both the franchise report and the PIR. Electronic filings receive immediate confirmation and avoid mail-processing delays. For no-tax-due filers, the entire workflow takes under 15 minutes.
How File.Business Manages Texas Compliance
File.Business handles Texas franchise tax and PIR filings for entities under our compliance service. We confirm revenue records, file Form 05-163 or the long-form report as applicable, file the Public Information Report with current officer information, and respond to any Comptroller correspondence on your behalf. The service includes ongoing good-standing monitoring and immediate notification if Texas issues any forfeiture warning.
Frequently asked questions
When is the Texas franchise report due?
May 15 of each year. The deadline applies to the franchise tax report, the Public Information Report (PIR), and any tax payment if applicable. This is one month later than the federal April 15 income tax deadline.
What is the Texas no-tax-due threshold for 2026?
$2.47 million in annualized total revenue. Entities at or below the threshold file Form 05-163 (No Tax Due Report) and owe zero franchise tax. Above the threshold, the long-form Form 05-158 with margin-tax calculations applies.
What is the Texas franchise tax rate?
0.375% for retailers and wholesalers (50% reduction for entities primarily engaged in retail or wholesale trade); 0.75% for most other businesses. The rate applies to taxable margin, calculated as the lowest of four formulas including total revenue minus cost of goods sold.
Do I have to file a Texas PIR even with no tax due?
Yes. The Public Information Report (Form 05-102) is required separately from the franchise tax report. Many businesses correctly file Form 05-163 (No Tax Due) but forget the PIR, triggering an independent penalty.
What is the Texas franchise tax late penalty?
$50 flat late penalty plus 5% on any unpaid tax for each month late, up to a 12-month maximum. Extended non-filing can result in forfeiture of the entity's right to transact business in Texas.
How do I get a Texas franchise tax extension?
File Form 05-164 by May 15 for a six-month extension to November 15. If tax is expected to be owed, 90% of the actual tax must be paid by May 15 to avoid underpayment penalties. For no-tax-due filers, the extension is a routine administrative request.
What happens if Texas forfeits my entity?
A forfeited entity cannot sue or defend itself in Texas courts and may lose limited liability protection during the forfeiture period. Reinstatement requires filing all back reports, paying all back taxes, penalties, and interest, plus obtaining a Tax Clearance Letter from the Comptroller.
How is partial-year revenue annualized for the Texas threshold?
Total revenue is multiplied by (12 / months in operation). A new LLC formed in October with $750,000 in revenue has annualized revenue of $3 million (well above the $2.47M threshold), putting it into the long-form filing requirement. Many partial-year LLCs miss this annualization rule.
Let File.Business handle the filing.
We pull your record from the state, prefill every field, and validate before submission. Same-day filing in most states. First year of registered agent included with new entity formations.
