For the applicable report year, Texas sets a No Tax Due threshold of USD 2,650,000, applies tax rates of 0.38% for retail/wholesale and 0.75% for other businesses, caps the compensation deduction at USD 480,000, and allows EZ computation for entities with up to USD 20 million in total revenue at a 0.33% rate.

RF Report

The Texas Comptroller of Public Accounts has released the franchise (margin) tax rates, thresholds, and deduction limits for 2026 and 2027.

The tax rates remain unchanged from 2024 to 2025, while both the no-tax-due threshold and the compensation deduction limit have been increased as detailed below.

The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organised in Texas or doing business in Texas.  The annual franchise tax report is due 15 May.  If 15 May falls on a weekend or holiday, the due date will be the next business day.

Tax Rates, thresholds, and deduction limits for 2026 and 2027

Franchise tax rates, thresholds, and deduction limits vary by report year. Use the rate that corresponds to the year for which you are filing.

Item Amount
No Tax Due Threshold USD 2,650,000
Tax Rate (retail or wholesale) 0.38%
Tax Rate (other than retail or wholesale) 0.75%
Compensation Deduction Limit USD 480,000
EZ Computation Total Revenue Threshold USD 20 million
EZ Computation Rate 0.33%

Final franchise tax reports

Before getting a Certificate of Account Status to terminate, convert, merge, or withdraw registration with the Texas Secretary of State:

  • A Texas entity terminating, converting, or merging must file its final tax report and pay any amount due in the year it plans to terminate, convert, or merge.
  • An out-of-state entity that ends its nexus in Texas must file its final report and pay any amount due within 60 days of ceasing to have nexus.

Penalties

  • A USD 50 penalty is assessed on each report filed after the due date.
  • If tax is paid 1-30 days after the due date, a 5% penalty is assessed.
  • If tax is paid over 30 days after the due date, a 10% penalty is assessed.

Interest

  • Past due taxes are charged interest beginning 61 days after the due date.
  • To calculate interest on past due taxes, visit Interest Owed and Earned.