Texas LLC Costs 2026: $300 to Form + $0/yr

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

Franchise Tax Rates (If Above Threshold)

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 the next business day)
• Extension: An extension of time to file is available on request
• Below the threshold: Since the 2024 report year, entities at or below the No Tax Due Threshold no longer file a No Tax Due Report — but you still file the Public Information Report (see below)

Public Information Report

Texas doesn't have a traditional annual report. Instead, the Texas Comptroller requires LLCs to file a Public Information Report (PIR), Form 05-102, every year.

PIR Requirements

• Form: 05-102, the Public Information Report (LLCs file the PIR, not the OIR)
• Due date: May 15 each year (same as the franchise tax report)
• Filing fee: $0 (no charge)
• Filed with: Texas Comptroller (not the Secretary of State)
• Required even if: Your revenue is at or below the $2.65 million No Tax Due Threshold

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

1. Access the Texas Comptroller's WebFile system
2. Log in with your Texas Taxpayer ID
3. If your revenue is above $2.65 million, complete the franchise tax report
4. Complete the Public Information Report (Form 05-102)
5. Submit 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: Only if revenue exceeds the $2.65 million (2026) threshold

For the full picture of ongoing obligations beyond taxes, see our Texas LLC compliance hub, which links every Texas filing requirement in one place.

Comparison with Other States

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 (Revenue ≤ $2.65M)

First Year Costs

To stay compliant after formation, read up on Texas registered agent requirements, what happens with Texas LLC late filing penalties, and how to handle registering an out-of-state LLC in Texas ($750).