Texas Franchise Reports Due May 15, 2025
Taxable businesses formed or doing business in Texas with annual revenue greater than $2,470,000 must file a Texas Franchise Tax Report.
According to the Texas Comptroller of Public Accounts website, the franchise tax is “a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas”.
Taxable entities generally include corporations, LLCs, banks and bank associations, parnerships, trusts, professional and business associations, and joint ventures.
Sole proprietorships and general, non-LLC partnerships with direct ownership composed of natural persons, however, are not required to file.
For 2024 and 2025, the following rates, thresholds, and deduction limits apply:
No Tax Due Threshold…………………
Tax Rate (retail or wholesale)……….
Tax Rate (other than retail or wholesale)…………………………………
Compensation Deduction Limit…….
EZ Compulation Total Revenue Threshold………………………………….
EZ Computation Rate…………………
$2.47 Million
0.375%
0.75%
$450,000
$20 Million
0.331%
Even if your business entity does not reach the threshold for filing a franchise report, you must continue to file an annual Information Report with the state.
How is the tax calculated?
The taxable margin can be calculated in several ways:
- total revenue x 0.70
- total revenue – cost of goods sold (COGS)
- total revenue – compensation
- total revenue – $1 million
Total revenue is calculated by excluding the following items from the revenue reported on the years federal income tax return:
- dividends from federal obligations
- interest from federal obligations
- Schedule C dividents
- foreign royalites and dividends
- certain flow-through funds
- industry-specific exclusions
Check out this useful took from David French & Associates!
Need help filing taxes for your Texas business?
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