Key Takeaways
- Texas has no state personal income tax — LLC owners pay federal income tax on profits only
- Franchise Tax (Margin Tax): 0.75% of taxable margin for most entities (0.375% for qualifying retail/wholesale trades); no tax due below the $2,650,000 no-tax-due revenue threshold for the 2026 and 2027 report years. An E-Z Computation rate of 0.331% of total revenue is available to entities with $20,000,000 or less in annualized total revenue, in lieu of the margin calculation., due May 15 annually
- Sales Tax: 6.25% (combined: Up to 8.25% combined (state cap plus up to 2% local) — roughly 77% of Texas cities sit at the maximum)
- Public Information Report (PIR) due May 15 annually, No separate fee — filed alongside the Franchise Tax Report fee
- Federal self-employment tax of 15.3% applies to net LLC profit regardless of state
- Texas recognizes the federal S-Corp election automatically with no separate state approval — and the Franchise Tax treats LLCs and S-corps identically, since it's assessed against the legal entity regardless of federal tax classification.
- Same-day formation and compliance filing available through LLC Attorney at no markup on state fees
Texas has no personal income tax, and a 2019 constitutional amendment makes creating one require a statewide vote — a genuinely durable protection most states don't offer. Most small Texas LLCs also owe zero Franchise Tax, since the no-tax-due threshold sits at $2,650,000 in annualized revenue for 2026 and 2027. But 'no tax due' isn't the same as 'no filing required' — every Texas LLC must file a Public Information Report each year regardless of revenue, and skipping it is the most common Texas compliance mistake.
This guide covers exactly what a Texas LLC owes in 2026: the Franchise (Margin) Tax and its no-tax-due threshold, the mandatory Public Information Report, sales tax rules, self-employment tax, and why an S-Corp election is purely a federal calculation in Texas.
Texas Personal Income Tax on LLC Profit
By default, a Texas LLC is a pass-through entity for federal tax purposes — profit flows to the owners' 1040s with zero state personal income tax, since Texas doesn't have one. The entity itself is a separate story: nearly every Texas LLC must still file with the Comptroller each year, and above a substantial revenue threshold, pay the state's Franchise Tax.
Texas has no state personal income tax. Your LLC's profit passes through to your personal federal return, but there is no additional state-level income tax layer on top of it — a meaningful, permanent savings compared to income-tax states.
Texas's Franchise Tax (Margin Tax)
Every Texas LLC has a Franchise Tax filing obligation, but most owe nothing: below the $2,650,000 no-tax-due revenue threshold for 2026 and 2027, no tax is due. Above that threshold, the tax is computed on taxable margin (revenue minus the most favorable of cost of goods sold, compensation, or a 30% standard deduction) at 0.75% for most entities, or 0.331% of total revenue under the simplified E-Z Computation for qualifying entities. Critically, even LLCs that owe zero tax must still file the Public Information Report every year — skipping this is the single most common Texas compliance mistake, since founders assume 'no tax due' means 'no filing required.'
The no-tax-due threshold rose to $2,650,000 for the 2026 and 2027 report years, up from $2.47 million for 2025. Since reports due on or after January 1, 2024, entities at or below the threshold no longer file a separate 'No Tax Due Report' — but every LLC, regardless of revenue, must still file the Public Information Report (PIR) or Ownership Information Report (OIR). The Franchise Tax applies to the legal entity itself regardless of federal tax classification — electing S-Corp status makes no difference to Texas margin tax exposure.
Texas Sales Tax
Most sales of tangible personal property and specifically taxable services require registration and collection. The 6.25% state rate is fixed statewide, but local jurisdictions can add up to 2% on top, and Texas caps the combined rate at 8.25% — a ceiling the large majority of Texas cities have already reached.
- State rate: 6.25%, combined: Up to 8.25% combined (state cap plus up to 2% local) — roughly 77% of Texas cities sit at the maximum
- Registration: Texas Sales and Use Tax Permit (Form AP-201 or online), No fee fee with the Texas Comptroller of Public Accounts
- The Comptroller assigns your filing frequency — monthly, quarterly, or annual — based on your collected tax volume.
Texas Annual Report Requirement
Texas requires every LLC to file Public Information Report (PIR) with the Texas Comptroller of Public Accounts, due May 15 annually. Filing fee: No separate fee — filed alongside the Franchise Tax Report.
Failing to file the Franchise Tax Report and PIR leads first to forfeiture of the LLC's right to transact business in Texas, and ultimately to the Secretary of State forfeiting the entity's existence entirely.
Reinstatement requires curing every delinquent filing and tax owed with the Comptroller, then paying a reinstatement fee to the Secretary of State to restore the entity's existence.
Federal Self-Employment Tax and How Your Texas LLC Is Classified
Regardless of which state you're in, LLC owners who materially participate in the business owe federal self-employment tax — 15.3% on net profit, covering Social Security (up to the $184,500 (2026) wage base) and Medicare (no cap).
Single-Member LLCs
A single-member Texas LLC defaults to a disregarded entity for federal tax purposes — you report income on Schedule C and compute self-employment tax on Schedule SE. Texas adds no personal income tax filing, but the Franchise Tax/PIR obligation applies regardless of member count.
Multi-Member LLCs
A multi-member Texas LLC defaults to partnership taxation, filing Form 1065 and issuing Schedule K-1s. Franchise Tax and Public Information Report obligations are identical regardless of member count.
Should Your Texas LLC Elect S-Corp Taxation?
An S-Corp election lets you split LLC profit into a reasonable salary (payroll-taxed) and distributions (not subject to self-employment tax), once the business is consistently profitable enough to justify the added payroll complexity.
Texas's treatment: Texas recognizes the federal S-Corp election automatically with no separate state approval — and the Franchise Tax treats LLCs and S-corps identically, since it's assessed against the legal entity regardless of federal tax classification.
Because Texas has no personal income tax and the Franchise Tax ignores federal entity classification entirely, the decision to elect S-Corp status is purely a federal one: reasonable-salary payroll tax versus full self-employment tax on distributions. There's no Texas-side factor that changes the math either way.
Texas LLC Tax Costs at a Glance
How to Handle Your Texas LLC's Taxes
If You Do It Yourself
Step 1 — Get your federal EIN before anything else.
Apply for your EIN for free directly at irs.gov — a purely federal application with no Texas-specific step.
Step 2 — Confirm your default federal tax classification.
A single-member LLC defaults to a disregarded entity (Schedule C); a multi-member LLC defaults to partnership taxation (Form 1065 plus Schedule K-1 for each member). Neither requires a separate election — this is automatic unless you file Form 8832 or Form 2553 to change it.
Step 3 — Skip state income tax registration entirely.
Texas has no state personal income tax, so there's no state withholding or estimated-payment system to register for on the income side.
Step 4 — Register for sales tax if you sell taxable goods or services.
File Texas Sales and Use Tax Permit (Form AP-201 or online) with the Texas Comptroller of Public Accounts at comptroller.texas.gov/taxes/sales, No fee fee. The Comptroller assigns your filing frequency — monthly, quarterly, or annual — based on your collected tax volume.
Step 5 — Register for payroll/reemployment tax the moment you hire your first employee.
The moment you hire your first employee, register with the Texas Workforce Commission. The new-employer rate is 2.7% for most industries (some sectors have industry-specific initial rates) on the first $9,000 of each employee's wages.
Step 6 — Set up quarterly estimated tax payments.
Because Texas has no personal income tax, your estimated-payment obligation is purely federal — quarterly estimated payments covering income tax and self-employment tax if you expect to owe $1,000 or more for the year.
Step 7 — Calendar your Franchise Tax (Margin Tax) due date.
Franchise Tax (Margin Tax) (Form 05-158 (long form) or Form 05-169 (E-Z Computation)) is due May 15 annually, 0.75% of taxable margin for most entities (0.375% for qualifying retail/wholesale trades); no tax due below the $2,650,000 no-tax-due revenue threshold for the 2026 and 2027 report years. An E-Z Computation rate of 0.331% of total revenue is available to entities with $20,000,000 or less in annualized total revenue, in lieu of the margin calculation.. Missing it puts your LLC in bad standing with the Texas Comptroller of Public Accounts.
Step 8 — File your Public Information Report (PIR) every Texas deadline.
Public Information Report (PIR) is due May 15 annually with the Texas Comptroller of Public Accounts, No separate fee — filed alongside the Franchise Tax Report fee.
Step 8 — Decide whether an S-Corp election makes sense once your LLC is consistently profitable.
Because Texas has no personal income tax and the Franchise Tax ignores federal entity classification entirely, the decision to elect S-Corp status is purely a federal one: reasonable-salary payroll tax versus full self-employment tax on distributions. There's no Texas-side factor that changes the math either way.
Step 9 — Watch for Texas-specific tax traps.
The most common Texas LLC mistake isn't a missed tax payment — it's a missed Public Information Report. Because most small LLCs owe $0 in Franchise Tax below the $2,650,000 threshold, founders often assume there's nothing to file at all. There is: the PIR is mandatory every year regardless of revenue, and skipping it risks forfeiture of the right to do business in Texas. The margin tax computation itself (revenue minus COGS, compensation, or a 30% standard deduction, whichever is most favorable) is also genuinely complex once you're above the threshold.
Step 10 — Keep business and personal finances completely separate.
Commingling funds is the single biggest reason courts pierce the LLC liability shield, and it also makes tax preparation far more error-prone. Run all business income and expenses through a dedicated business bank account and keep receipts.
If LLC Attorney Does It for You
- Submit your information at llcattorney.com — entity classification, expected revenue, and whether you'll be hiring employees or collecting sales tax.
- LLC Attorney obtains your EIN, registers you with the Texas Comptroller of Public Accounts and Texas Comptroller of Public Accounts as needed, and sets up your compliance calendar for Public Information Report (PIR) and Franchise Tax (Margin Tax).
- Receive reminders before every deadline through your client portal, plus access to flat-fee attorney consultations (no retainer) when an S-Corp election or multi-state question needs a licensed professional's judgment call.
When Should You Talk to a Tax Professional About Your Texas LLC?
A CPA is worth engaging once your Texas LLC approaches the no-tax-due threshold, to determine which margin calculation method minimizes your Franchise Tax liability, to confirm your entity's PIR is filed correctly every year even at $0 tax due, and to plan around any multi-state nexus if you sell into or operate in other states.
Is Texas a State Where Tax Complexity Matters More?
Once a Texas LLC crosses the $2,650,000 no-tax-due threshold, the Franchise Tax computation gets genuinely involved — choosing the most favorable of three margin calculations (cost of goods sold, compensation, or the 30% standard deduction), then applying the correct rate for your entity type. Getting this wrong either overpays the tax or triggers a Comptroller adjustment.
What You Actually Get With LLC Attorney's Texas Compliance Service
Most Texas LLCs owe $0 in Franchise Tax — but the Public Information Report is still mandatory every year, and missing it risks forfeiture of your right to do business in Texas. LLC Attorney's Texas service keeps this filing on track even when there's no tax bill to remind you.
- EIN obtained for you at no extra charge.
- State tax and sales tax registration handled as part of formation, starting at $49.
- An ongoing compliance subscription (available through an ongoing compliance subscription — contact LLC Attorney for current pricing) tracks every Texas deadline — Public Information Report (PIR), Franchise Tax (Margin Tax), and registered agent renewal.
- Access to professionally trained Business Success Advisors at no charge, plus flat-fee attorney consultations (no retainer) for S-Corp election analysis and multi-state nexus questions.
Texas rewards LLCs that stay organized around one thing: filing even when nothing's owed. LLC Attorney makes sure your Public Information Report never slips through the cracks.
Get Your Texas LLC's Taxes Set Up Correctly
Getting your EIN, tax registrations, and compliance calendar right from day one prevents expensive corrections later. LLC Attorney's Texas formation service starts at $49, and an ongoing compliance subscription (available through an ongoing compliance subscription — contact LLC Attorney for current pricing) keeps you ahead of every deadline after that. See our full pricing for all service tiers.
Frequently Asked Questions
It depends on revenue. Texas's Franchise (Margin) Tax has no tax due below $2,650,000 in annualized total revenue for the 2026 and 2027 report years. Above that, most entities owe 0.75% of taxable margin (0.375% for qualifying retail/wholesale trades), or 0.331% of total revenue under the simplified E-Z Computation. Critically, every LLC must still file the Public Information Report annually even when no tax is due.
Only if you sell taxable tangible personal property or services in Texas. Register for free with the Comptroller (Form AP-201), then collect the 6.25% state rate plus applicable local add-ons — combined rates are capped statewide at 8.25%, a ceiling most Texas cities have already reached.
Texas doesn't use a separate 'annual report' — instead, every LLC files a Public Information Report (PIR) alongside its Franchise Tax Report, due May 15 each year, with no separate filing fee. This applies even to LLCs that owe zero Franchise Tax.
Missing the May 15 Franchise Tax Report/PIR deadline first leads to forfeiture of your LLC's right to transact business in Texas, and ultimately the Secretary of State can forfeit the entity's existence entirely. Reinstatement requires curing all delinquent filings and taxes with the Comptroller, plus a reinstatement fee to the Secretary of State.
Texas's Franchise Tax applies identically to LLCs and S-corps — it's assessed against the entity regardless of federal tax classification, so electing S-Corp status doesn't reduce it. The entire benefit of an S-Corp election in Texas is federal self-employment tax savings; there's no Texas-side consideration to factor in.
A single-member Texas LLC defaults to a disregarded entity for federal tax purposes — you report income on Schedule C and pay self-employment tax via Schedule SE. Texas adds no state income tax filing, but the Franchise Tax/PIR obligation still applies at the entity level.
If your LLC does business in a state other than the one it's formed in — an office, employees, inventory, or significant sales there — you may have created nexus requiring registration and tax obligations in that state too. This is fact-specific and worth a conversation with a tax professional if you operate in multiple states.
For a typical Texas LLC with in-state owners, no employees, and revenue under $2,650,000: no state personal income tax and no Franchise Tax due — just the annual Public Information Report filing, plus federal income tax and 15.3% federal self-employment tax (up to the $184,500 Social Security wage base for 2026). Add 6.25%–8.25% sales tax only if you sell taxable goods or services.
Yes. LLC Attorney's ongoing compliance subscription tracks your Texas filing deadlines, handles your Public Information Report (PIR), and connects you with flat-fee attorney consultations (no retainer) when a tax question needs a licensed professional's judgment call.