Texas taxes

Texas has no personal income tax, and its constitution forbids one. A sole proprietor with no LLC owes Texas nothing and files nothing. Every LLC, partnership and corporation falls under the franchise tax. Below $2,470,000 of revenue for 2025 no franchise tax is due, but the business still files a Public Information Report or Ownership Information Report. Above that, the tax is 0.75% of margin, or 0.375% for a business mainly in retail or wholesale.

Personal income tax

Texas does not tax the income of individuals, so there is no Texas personal return to file. The state constitution forbids a personal income tax.

Texas does have a franchise tax, but it falls on business entities, not on people. It never appears on a personal return, and a sole proprietor does not file it.

Sole proprietor

A sole proprietor with no LLC is not a taxable entity for the Texas franchise tax. There is no franchise tax report and no information report to file, and no personal income tax either, so there is nothing to file with Texas.

Forming an LLC changes that. Texas looks at how the business is legally set up, not at how the IRS treats it, and an LLC owes the report even in a year it owes no tax.

Single-member LLC

A single-member LLC is a taxable entity for the Texas franchise tax, even though the IRS ignores it for income tax. Texas goes by the legal structure, not the federal treatment.

The LLC files a Franchise tax report plus the Public Information Report or Ownership Information Report. Below $2,470,000 of revenue for 2025 no tax is due, but the report still has to be filed. It is the filing people most often skip, because they hear that no tax is due and stop there. Above that level the tax is worked out on margin, as described under C corporation below.

Partnership

A partnership files a Texas franchise tax report. Below $2,470,000 of revenue for 2025 no tax is due, but the Public Information Report or Ownership Information Report still has to be filed.

Above that level the tax is worked out on margin, the same way as for a corporation (see below). Texas has no personal income tax, so the partners owe Texas nothing on their share of the profit.

S corporation

An S corporation files the same Texas franchise tax report as any other corporation. Below $2,470,000 of revenue for 2025 no tax is due, but the Public Information Report or Ownership Information Report still has to be filed.

Above that level the tax is worked out on margin (see C corporation below). Texas has no personal income tax, so the shareholders owe Texas nothing on their share of the profit.

C corporation

A corporation files a Texas franchise tax report. Texas taxes margin, not profit and not plain revenue. Margin is the lowest of 70% of total revenue, revenue minus $1,000,000, revenue minus cost of goods sold, or revenue minus compensation, and the business picks which. The rate is 0.75%, or 0.375% for a business mainly in retail or wholesale trade.

Below $2,470,000 of revenue for 2025 no tax is due at all, but the Public Information Report or Ownership Information Report still has to be filed.

Return

Texas franchise tax report

Tax base

Margin: the lowest of 70% of total revenue, revenue minus $1,000,000, revenue minus cost of goods sold, or revenue minus compensation

Rate

0.75%, or 0.375% for retail or wholesale

No tax due

Below $2,470,000 of revenue for 2025

Due even with no tax

Public Information Report or Ownership Information Report

Estimate your state tax

Pick your business type and enter this year's numbers to see the state business tax Texas charges. It assumes all your sales are in Texas.

An estimate for planning, not tax advice.

Sources

• Texas Constitution, article VIII, section 24-a, added by Proposition 4 (November 2019)
• comptroller.texas.gov Franchise Tax
• comptroller.texas.gov Franchise Tax Overview (publication 98-806)
• comptroller.texas.gov EZ Computation Report

Last reviewed August 2026.