Do You Have to Pay Franchise Tax If Less Than $1,000 in Texas?

Texas businesses often ask: “If my franchise tax due is under $1,000, do I still have to pay it?” The short answer is no—you do not have to pay it, but you still must file a franchise tax report with the state.

This rule can be confusing for small business owners and startups, especially those operating close to the No Tax Due Threshold. Here's how it works.

No Payment Required If Tax Due Is Under $1,000

The Texas Comptroller allows for a payment waiver if the amount of franchise tax due for the year is less than $1,000. In these cases, the business is not required to submit a payment.

However, this does not exempt the business from its annual filing obligation. You must still complete and submit a franchise tax report—even if your calculated tax falls under the $1,000 mark.

This provision is designed to ease the burden on small businesses while still maintaining accurate records with the state.

Filing Is Still Mandatory

Even if:

  • Your total revenue exceeds the No Tax Due Threshold (currently $2.47 million), but

  • Your calculated tax liability is under $1,000,

You are required to file either an EZ Computation Report or a Long Form Report, depending on your business size and preferences.

Failure to file, even when no payment is due, can lead to:

  • Late filing penalties

  • Accrued interest

  • Loss of good standing with the Texas Comptroller

  • Potential forfeiture of your entity’s right to do business in Texas

Why It Matters

Many small businesses make the mistake of assuming that no payment means no filing. But in Texas, the two are separate obligations. You may qualify for a waiver on the payment, but not the reporting.

Filing every year ensures that your business stays compliant and avoids unnecessary fees or administrative issues down the line.

George Dimov