Do I Have to File Texas Franchise Tax?

Do I Have to File Texas Franchise Tax

If you operate a business entity in Texas—or do business in the state—the answer is almost always yes: you are required to file a Texas Franchise Tax report every year, even if your company owes no tax. Many small business owners assume that if their revenue is low or they didn’t make a profit, they’re exempt from filing. Unfortunately, that assumption can lead to penalties, forfeiture of business rights, or loss of good standing with the state.

Filing Is Mandatory for Most Business Entities

Under Texas law, all taxable entities must file a franchise tax return annually. This includes:

  • LLCs (Limited Liability Companies)

  • Corporations (C-Corps and S-Corps)

  • Partnerships, such as LLPs and LPs

  • Professional associations

  • Business trusts and other registered entities

The only major exceptions are sole proprietorships and general partnerships composed only of natural persons—these are not considered taxable entities under Texas franchise tax law.

Even if your business qualifies for the No Tax Due Threshold (currently $2.47 million in total revenue), you are still obligated to file a report each year.

Types of Franchise Tax Reports

There are three main types of reports, depending on your business's revenue and preferences:

  1. No Tax Due Report – For businesses under the revenue threshold who owe no tax.

  2. EZ Computation Report – For entities with revenue under $20 million seeking a simplified calculation method.

  3. Long Form Report – For larger businesses or those that need to claim deductions and calculate their tax in more detail.

All franchise tax reports are due annually on May 15, unless the date falls on a weekend or holiday.

Why Filing Matters—Even With No Tax Due

Failing to file a franchise tax report—even if no tax is owed—can result in:

  • Penalties or interest for late or missing reports

  • Loss of good standing with the Texas Comptroller

  • Forfeiture of the right to transact business in Texas

That’s why it’s crucial for business owners to stay on top of annual filing deadlines, regardless of revenue or tax liability.

George Dimov