Texas LLC Taxes & Fees 2026: Complete Cost Guide
Quick Answer
Texas has NO state income tax, making it attractive for business owners. The LLC formation fee is $300, and there's no separate annual report fee. However, most businesses must file a Public Information Report with the Texas Comptroller by May 15 each year. The Texas franchise (margin) tax exempts businesses with total revenue under $2.47 million, meaning most small LLCs owe no franchise tax.
Key Takeaways
- No Texas state income tax on individuals
- $300 LLC formation fee (Certificate of Formation)
- No annual report fee - just file Public Information Report
- Franchise tax: 0% for businesses under $2.47 million revenue
- If revenue exceeds threshold: 0.375% (retail/wholesale) or 0.75% (other)
- Public Information Report due May 15 each year
| Item | Cost/Details | Notes |
|---|---|---|
| Certificate of Formation | $300 | One-time formation fee |
| Public Information Report | $0 | No filing fee |
| Franchise Tax (under $2.47M) | $0 | No tax owed |
| Franchise Tax (retail/wholesale) | 0.375% | On taxable margin |
| Franchise Tax (other businesses) | 0.75% | On taxable margin |
| Foreign LLC Registration | $750 | Higher than domestic |
LLC Formation Costs
Forming an LLC in Texas requires filing a Certificate of Formation with the Texas Secretary of State.
Certificate of Formation Filing
- Filing fee: $300
- Processing time: 3-5 business days (online)
- Filing method: Online through SOSDirect or by mail
- Expedited options: Available for additional fees
Optional Services
| Service | Fee |
|---|---|
| Name Reservation | $40 (120 days) |
| Certified Copy | $15 |
| Certificate of Good Standing | $15 |
| Expedited Processing | $25-$50 |
Note: Texas's $300 formation fee is higher than many states. However, the low ongoing costs (no annual report fee, franchise tax exemption) make Texas affordable over time.
Texas Franchise (Margin) Tax
Texas doesn't have a traditional corporate income tax. Instead, it has a franchise tax (also called "margin tax") based on business revenue. The good news: most small businesses are exempt.
Franchise Tax Exemption
No Tax Due Threshold (2026)
Businesses with total revenue of $2.47 million or less owe no Texas franchise tax. This threshold is adjusted periodically by the Comptroller.
Franchise Tax Rates (If Above Threshold)
| Business Type | Tax Rate |
|---|---|
| Retail and wholesale businesses | 0.375% |
| All other businesses | 0.75% |
Calculating Taxable Margin
If you exceed the revenue threshold, you calculate tax on "taxable margin." Texas allows you to choose the most favorable method:
- Total revenue minus cost of goods sold (COGS)
- Total revenue minus compensation
- 70% of total revenue
- Total revenue minus $1 million
Filing Requirements
- Due date: May 15 each year (or next business day)
- Extension: Automatic 6-month extension available
- Even if exempt: Must file No Tax Due report if revenue is under threshold
Public Information Report
Texas doesn't have a traditional annual report. Instead, the Texas Comptroller requires a Public Information Report (PIR).
PIR Requirements
- Due date: May 15 each year (same as franchise tax)
- Filing fee: $0 (no charge)
- Filed with: Texas Comptroller (not Secretary of State)
- Required even if: No franchise tax is due
Information Required
- Principal office address
- Principal place of business in Texas
- Registered agent and address
- Names and addresses of officers/directors or members/managers
- Business NAICS code
How to File
- Access the Texas Comptroller's WebFile system
- Log in with your Texas Taxpayer ID
- Complete the franchise tax report (even if No Tax Due)
- Complete the Public Information Report
- Submit both by May 15
No State Income Tax Advantage
One of Texas's biggest advantages is having no state income tax for individuals or businesses.
What This Means for LLCs
- Pass-through taxation: LLC income passes to members without state income tax
- No LLC income tax: Texas doesn't tax LLC business income separately
- Federal taxes still apply: You still owe federal income tax
- Franchise tax may apply: If revenue exceeds $2.47 million threshold
Comparison with Other States
| State | State Income Tax | LLC Annual Cost |
|---|---|---|
| Texas | None | $0 (under $2.47M) |
| California | Up to 13.3% | $800 minimum |
| New York | Up to 10.9% | $25+ annual fee |
| Florida | None (individuals) | $138.75 |
Other Texas Business Taxes
Sales Tax
If your LLC sells taxable goods or services:
- State rate: 6.25%
- Local rates: Up to 2% additional (varies by city/county)
- Maximum total: 8.25%
- Registration: Must get Texas Sales Tax Permit
Property Tax
Texas has no state property tax, but local governments (counties, cities, school districts) levy property taxes. These can be significant for businesses with real property.
Employment Taxes
- Texas Unemployment Tax: Required if you have employees
- No state withholding: No state income tax to withhold
- Federal requirements: Standard federal employment taxes apply
Total Annual Costs
Small Business (Under $2.47M Revenue)
| Item | Annual Cost |
|---|---|
| Franchise Tax | $0 |
| Public Information Report | $0 |
| Registered Agent (if using service) | $50-$200 |
| Total Annual | $0-$200 |
First Year Costs
| Item | Cost |
|---|---|
| Certificate of Formation | $300 |
| Registered Agent (optional service) | $50-$200 |
| Franchise Tax/PIR (Year 1) | $0 |
| Total First Year | $300-$500 |
Bottom Line: Texas is one of the most affordable states for LLC maintenance. After the initial $300 formation fee, most small businesses pay nothing in state fees or taxes. This makes Texas particularly attractive for small business owners.
Frequently Asked Questions
Does Texas have a state income tax for LLCs?
What is the Texas franchise tax exemption threshold?
Do I have to file an annual report for my Texas LLC?
How is the Texas franchise tax calculated?
What happens if I don't file the Public Information Report?
Is Texas a good state to form an LLC?
Official Source
For the most up-to-date information, always verify requirements with the official Texas Secretary of State website:
https://www.sos.state.tx.us/corpImportant Disclaimer
This article is for informational purposes only and does not constitute legal advice. LLC requirements, fees, and deadlines change frequently. Always verify current requirements with your state's Secretary of State office before making business decisions.
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