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 obligation Tex. Tax Code § 171.202 creates. It is due by May 15 each year, and it covers the prior tax year. Texas is unique among large states: its franchise tax works as a margin tax, not an income tax or annual report fee.
For most Texas small businesses, the franchise report is a no-tax-due filing. For the 2026 report year, the no-tax-due threshold is $2.65 million in annualized total revenue. The filing mechanics changed for report year 2024 and later: the Comptroller no longer offers a No Tax Due Report, and Form 05-163 is not available for 2026 reports. An entity at or below the threshold now files only an information report - either the Public Information Report (Form 05-102) or the Ownership Information Report (Form 05-167) - and owes no tax report at all. Above the threshold, the business must calculate and pay the margin tax.
Who must file
All entities chartered or organized in Texas must file annually. So must all out-of-state entities that registered to do business in Texas through foreign qualification. 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. These include 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 to $2,650,000 | No tax report. Information report only | Yes, Form 05-102 or Form 05-167 | $0 |
| Above $2,650,000, up to $20M | Form 05-169 (EZ Computation) or Form 05-158 | Yes, Form 05-102 or Form 05-167 | 0.331% of total revenue, or margin tax |
| Above $20M | Form 05-158 (Long-Form) | Yes, Form 05-102 or Form 05-167 | Margin tax calculation |
Texas requires up to three forms depending on the entity's situation. Knowing which forms apply prevents under-filing and the penalty assessments that follow.
Below the threshold: information report only
For entities with annualized total revenue at or below $2.65 million, there is now no tax report to file. The Comptroller retired the No Tax Due Report after report year 2023. The only remaining obligation is the information report: Form 05-102 for corporations, LLCs, professional associations, banking associations, and financial institutions, or Form 05-167 for partnerships and trusts. Most small Texas businesses fall here and pay no franchise tax at all. The information report is still mandatory - skipping it is what triggers the penalty, and eventually forfeiture.
Form 05-158 + Schedules: Long-Form Report
Above $2.65 million, taxable margin is the lowest of four figures: total revenue minus cost of goods sold; total revenue minus compensation; 70 percent of total revenue; or total revenue minus $1 million. The compensation subtraction is capped at $480,000 per person for the 2026 and 2027 report years. Then multiply margin by the rate: 0.375 percent for entities primarily engaged in retail or wholesale trade, and 0.75 percent for everyone else.
An entity under $20 million in total revenue may instead elect the EZ Computation on Form 05-169. It charges 0.331 percent of total revenue, with no deductions and no credits. Run both calculations - the EZ route is simpler, but it is not always cheaper.
Form 05-102: Public Information Report (PIR)
Besides 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 counts as a separate violation from missing the franchise tax report. You must submit both forms together.
File your Texas report
We prepare it, file it with the agency, and confirm it came back accepted. Or keep reading and file it yourself; this guide covers both.
Texas Splits This Between Two Agencies, and It Matters
Almost every other state runs entity filings and entity taxes out of one office. Texas does not, and most of the confusion on this page traces back to that split.
| What you need | Which agency | Where it happens |
|---|---|---|
| Certificate of formation, amendments, reinstatement, termination | Texas Secretary of State | SOSDirect |
| Franchise tax report, information report, extension | Texas Comptroller of Public Accounts | Webfile |
| Certificate of Account Status, Form 05-359 | Texas Comptroller of Public Accounts | Issued by the Comptroller, filed with the Secretary of State |
| Tax clearance letter, Form 05-377 | Texas Comptroller of Public Accounts | Required before the Secretary of State will reinstate |
The Secretary of State holds the entity. The Comptroller holds the tax account. Neither tells you about the other, and calling the wrong one wastes a week. This matters most at two moments. To dissolve, the Comptroller must first issue a Certificate of Account Status - only then will the Secretary of State accept the termination. That is why closing a Texas entity takes longer than owners expect. To return from forfeiture, the Comptroller's tax clearance letter must come first.
Texas charges no annual report fee. That is why the fee record at api/state-fees.json carries Texas at $0, while California sits at $820. That $0 is real, but it is not the same as nothing to do. The information report is mandatory at every revenue level, and it is what keeps the entity in existence. Compare the shape of it against every other state in franchise tax by state and annual report deadlines by state.
One more Texas-specific point: the registered agent sits with the Secretary of State, not the Comptroller. A stale agent address is a common reason an entity never learns it has been forfeited. Keep it current through the Texas registered agent guide. If you are an out-of-state entity that started selling into Texas, read Texas foreign qualification alongside what creates nexus - the franchise obligation and the sales tax obligation begin at different moments.
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 due one month later. New Texas business owners often find this confusing.
Extension request
You can request a six-month extension to November 15 by filing Form 05-164 by May 15. If you expect to owe any tax, the extension requires a payment - you must pay 90% of the actual tax by May 15 to avoid underpayment penalties, even with an extension. For no-tax-due filers, the extension is just a routine administrative request, with no payment required.
The $50 late penalty and the 5 and 10 percent tiers
Texas does not charge a per-month percentage. Missing May 15, or the extended November 15 date, adds a $50 penalty for the late report itself. On top of that, tax paid 1 to 30 days late carries a 5 percent penalty, and tax paid more than 30 days late carries 10 percent. Statutory interest starts accruing on the 61st day after the due date. An entity below the threshold owes no tax, so its exposure is just the flat $50 for the late information report - plus a far more serious consequence: the Comptroller can forfeit the entity's right to transact business in Texas.
Forfeiture of right to transact business
If the franchise report stays 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 it effectively loses its limited liability protection during the forfeiture period. Reinstating a forfeited entity means filing every missed report, paying all back tax, penalties, and interest, and requesting a tax clearance letter (Form 05-377) from the Comptroller. Then you file the reinstatement application with the Secretary of State through SOSDirect. Two agencies, in that order. Our Texas reinstatement guide walks through the sequence.
Common Texas Franchise Report Mistakes
The combination of franchise tax, PIR, and a state-specific deadline produces several recurring errors among Texas LLCs and corporations.
Mistake 1: Missing the PIR while paying the tax
Some Texas businesses confirm they are under the threshold and stop there. They forget that the Public Information Report (Form 05-102) is itself a required filing. The Comptroller treats these as two separate filings, and missing the PIR can trigger forfeiture on its own, 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. It does not - Texas's May 15 deadline falls one month later. Calendar reminders set for April 15, the federal deadline, cause owners to miss the franchise report by exactly 30 days and trigger a one-month penalty assessment.
Mistake 3: Inflating revenue beyond the no-tax-due threshold
The $2.65 million threshold applies to annualized total revenue. For partial-year entities (formed mid-year), you annualize revenue by multiplying by (12 / months in operation). Take a new LLC formed in October with $750,000 in revenue: annualized, that is $3 million - above the threshold, and into the long-form filing. Many partial-year LLCs miss this annualization rule.
Mistake 4: Reading no tax due as nothing to file
This got worse when Texas retired the No Tax Due Report. Owners who remember filing Form 05-163 now log in, find no tax report waiting, and log back out. But the information report is the actual filing, and missing it starts the clock toward forfeiture. A forfeited entity cannot sue or defend itself in Texas courts, and officers can become personally liable for debts incurred while forfeited. Read the Texas annual report guide for what the report itself asks for.
Mistake 5: Asking the Secretary of State about franchise tax
Owners call the Secretary of State to ask why the entity is not in good standing. They are told the record looks fine, and they stop investigating there. But the Secretary of State cannot see the Comptroller's tax account. You check franchise tax standing on the Comptroller's Franchise Tax Account Status search - a Certificate of Account Status proves it. Pull it before you sign a lease or close a sale. Our guide to Texas certificates of status explains which document a counterparty is actually asking for.
How to simplify Texas Franchise Filing
For most Texas LLCs, the franchise report is a routine annual task. It takes 20-30 minutes if your 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 $2.65 million, you know the year is an information-report-only year. If revenue is approaching the threshold, you have time to consult a CPA before May 15. This forecast also raises 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 left, or a manager changed. Keep this list current alongside any corporate-resolution changes, and the PIR becomes a non-issue.
Practice 3: File electronically through Webfile
The Texas Comptroller's Webfile system lets you file both the franchise report and the PIR electronically. Electronic filings get immediate confirmation and avoid mail-processing delays. For no-tax-due filers, the whole process takes under 15 minutes.
Three Texas Filers, Three Outcomes
Revenue decides which report you file. Whether the year turns out cheap or expensive depends on whether the entity filed anything at all.
Example 1 - zero tax, forfeited anyway
Blanco Bend Ironworks LLC brought in $980,000, comfortably below the $2,650,000 threshold, and concluded there was nothing to file. Three May deadlines passed. The Comptroller assessed $50 for each missed information report, then forfeited the entity's right to transact business. The forfeiture surfaced when a general contractor ran a status check before awarding a $340,000 subcontract - and the award went elsewhere.
Outcome: Zero tax owed and zero filed are different things. The information report takes about fifteen minutes in Webfile, and it is the only thing standing between the entity and forfeiture.
Example 2 - two ways to compute, one much cheaper
Pecan Grove Freight LLC reported $4,300,000 of total revenue, so the threshold no longer helps. Cost of goods sold was $2,600,000, and total compensation was $1,900,000 across a crew of six - all under the $480,000 per-person cap. Margin is the lowest of four figures: $1,700,000 after cost of goods sold; $2,400,000 after compensation; $3,010,000 at 70 percent of revenue; and $3,300,000 after the $1 million subtraction. The lowest figure is $1,700,000. Freight is not retail or wholesale, so the rate is 0.75 percent.
Outcome: The EZ Computation is one page, and it would have cost $1,483 more. Under $20 million of revenue, run both and elect the cheaper one.
Example 3 - the annualization trap in a first partial year
Sabine Point Analytics LLC filed its certificate of formation with the Secretary of State on August 1, and booked $1,150,000 of revenue in its first five months. The owner compared $1,150,000 against $2,650,000 and filed an information report only. But Texas annualizes a partial first period: $1,150,000 multiplied by 12 over 5 is $2,760,000, which is above the threshold. The entity owed a tax report after all - on a 70 percent margin at 0.75 percent, tax was due on the actual period.
Outcome: Annualize before you compare. Any entity formed after January should run the multiplication before deciding which report year it is in.
How File.Business Manages Texas Compliance
File.Business handles Texas franchise tax and PIR filings for entities under our compliance service. We confirm your revenue records, file the information report or the long-form report as applicable, and file the Public Information Report with current officer information. We also respond to any Comptroller correspondence on your behalf. The service includes ongoing good-standing monitoring, with immediate notification if Texas issues any forfeiture warning.
Frequently asked questions
When is the Texas franchise report due?
May 15 of each year. This deadline applies to the franchise tax report, the Public Information Report (PIR), and any tax payment if applicable. It falls one month later than the federal April 15 income tax deadline.
What is the Texas no-tax-due threshold for 2026?
$2,650,000 in annualized total revenue for the 2026 report year. Form 05-163 was retired after report year 2023, so an entity at or below the threshold files only an information report - Form 05-102 or Form 05-167 - and owes zero franchise tax. Above the threshold, the EZ Computation or the long-form Form 05-158 applies.
What is the Texas franchise tax rate?
0.375% for entities primarily engaged in retail or wholesale trade, and 0.75% for every other business. The rate applies to taxable margin - the lowest of total revenue minus cost of goods sold, total revenue minus compensation, 70% of total revenue, or total revenue minus $1 million. An entity under $20 million in revenue may instead elect the EZ Computation, at 0.331% of total revenue.
What is the Texas franchise tax late penalty?
A flat $50 penalty applies for the late report. Then, 5% of any unpaid tax if it is 1 to 30 days late, and 10% if it is more than 30 days late. Interest starts on the 61st day after the due date. Extended non-filing results 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 you expect to owe tax, you must pay 90% of the actual tax by May 15 to avoid underpayment penalties. For no-tax-due filers, the extension is just a routine administrative request.
What happens if Texas forfeits my entity?
A forfeited entity cannot sue or defend itself in Texas courts, and it may lose limited liability protection during the forfeiture period. Reinstatement requires filing all back reports, paying all back taxes, penalties, and interest, and getting a Tax Clearance Letter from the Comptroller.
How is partial-year revenue annualized for the Texas threshold?
You multiply total revenue by (12 / months in operation). Take a new LLC formed in October with $750,000 in revenue: its annualized revenue is $3 million, above the $2,650,000 threshold - so it falls into a tax-report year. Many partial-year LLCs miss this annualization rule.
File your Texas report
We prepare it, file it with the agency, and confirm it came back accepted. Or keep reading and file it yourself; this guide covers both.
This guide is written from the official sources below. Fees, forms, and deadlines change. Confirm the current requirement with the agency before you file.
Disclosure. File.Business is a private filing service. We are not a government agency and not a law firm. We prepare and submit filings at your direction, and nothing on this page is legal or tax advice. Filing fees, deadlines, and statutory references are current as of the last-updated date shown above, and they can change. Confirm current requirements with the relevant state agency before you file.
