How to File Franchise Tax in Texas: Deadlines, Reports, and Extensions

To file franchise tax in Texas, every taxable entity submits an annual report to the Texas Comptroller of Public Accounts by May 15, along with a Public Information Report or Ownership Information Report, and pays any tax due through the state’s electronic systems. For the 2026 report year, entities with annualized total revenue of $2,650,000 or less owe no tax and no longer file a No Tax Due Report, but they still owe the information report.¹²

Who Has to File

The franchise tax reaches nearly every entity with liability protection or a formal structure: corporations, LLCs, limited partnerships, limited liability partnerships, professional associations, business trusts, and joint ventures, among others.³ The obligation applies whether or not the entity turned a profit.

A few types sit outside the tax. A sole proprietorship that isn’t organized to limit the owner’s liability is not a taxable entity. Neither is a general partnership or joint venture owned entirely and directly by natural persons.⁴

Certain partnerships and non-business trusts can qualify as passive entities and owe no tax if at least 90 percent of federal gross income comes from passive sources (dividends, interest, capital gains on real property or securities, mineral royalties or bonuses) and no more than 10 percent from an active trade or business, for the entire reporting period. A qualifying passive entity still files a report.⁵

The May 15 Deadline

The annual report is due May 15. If May 15 lands on a weekend or state holiday, the deadline moves to the next business day. This applies to every taxable entity, tax owed or not.⁶

A newly formed entity’s first annual report is due May 15 of the year after formation. There is one wrinkle: if the first anniversary of the entity’s beginning date falls after October 3 and before January 1, the initial period’s tax payment lines up with the first regular annual payment.

Which Report You File

Your annualized total revenue decides which of three paths you take.

If your annualized total revenue is $2,650,000 or less for the 2026 report year, you owe no franchise tax and do not file a No Tax Due Report. You do still file a Public Information Report or Ownership Information Report by May 15.¹

If your annualized total revenue is $20 million or less, you can use the EZ Computation Report. It applies a flat 0.331 percent to apportioned total revenue. The trade-off: no margin deductions (no cost of goods sold, no compensation deduction) and no franchise tax credits.⁷

Otherwise, you file the Long Form. Long Form is also the right choice, even under $20 million, if the margin deductions and credits it allows will beat the EZ rate.

What to Gather Before You Start

You’ll need your 11-digit Texas Taxpayer Number, which the Comptroller assigns separately from any federal ID.⁸ Also have your 9-digit federal Employer Identification Number and your NAICS code.

Keep your most recent federal tax return within reach. Total revenue on the franchise tax report is derived from specific lines on the federal return, so pulling numbers directly avoids calculation errors.⁹ If you’re taking a cost of goods sold or compensation deduction on the Long Form, have the underlying records ready too.

Calculating What You Owe

On the Long Form, your tax base is taxable margin. You calculate margin under four methods and use whichever produces the lowest result:

Total revenue times 70 percent
Total revenue minus cost of goods sold
Total revenue minus compensation
Total revenue minus $1 million

Take that number, apportion it to Texas based on the share of revenue earned in the state, and apply the rate.¹⁰ The 70 percent method also functions as a cap: your margin can never exceed 70 percent of total revenue no matter which deduction you pick.

If you use the compensation deduction, the per-employee cap is $480,000 for the 2026 report year.¹¹

For 2026 reports, the rates are 0.375 percent for retail or wholesale businesses, 0.75 percent for other taxable entities on the Long Form, and 0.331 percent for EZ Computation filers (applied to apportioned total revenue, not margin).⁶

The Information Report You Also Have to File

Every taxable entity files either a Public Information Report (Form 05-102) or an Ownership Information Report (Form 05-167) alongside its franchise tax report. Corporations, LLCs, limited partnerships, professional associations, and financial institutions file the PIR, which lists officers, directors, and the registered agent. Other taxable entities file the OIR.¹²

Skipping the PIR or OIR, or filing it incomplete or unsigned, can cost your entity the right to transact business in Texas, even in a year you owe no tax.

Filing and Paying

Webfile is the Comptroller’s primary electronic filing portal. You register for an eSystems account linked to your taxpayer number, open the franchise tax section, and enter or upload your data. The system returns a confirmation number that serves as proof of timely submission.¹³

You can also file on paper. Download the forms, fill them out in Adobe Reader, and mail them to the address in the form instructions. Use a mailing method with tracking so you can confirm delivery before May 15.

Pay through TEXNET (electronic funds transfer) or by electronic check (WebEFT). If your entity paid $10,000 or more in franchise tax during the previous state fiscal year, you’re generally required to pay by EFT going forward.¹⁴

If You Need More Time: Extensions

You can extend the filing deadline, but only if you request the extension by May 15. Extensions buy time to file, not time to pay.

If you are not required to pay by EFT, file Form 05-164 with a payment by May 15. That moves your filing deadline to November 15. To qualify, pay either 90 percent of the tax that will be due on the current year’s report or 100 percent of the tax reported last year.¹⁵

EFT-required entities use a two-step process. Request the first extension through Webfile or a TEXNET payment by May 15 to move the deadline to August 15. Request a second extension by August 15 to reach November 15. Don’t submit Form 05-164 if you’re an EFT filer.¹⁵

Penalties, Interest, and Forfeiture

Missing the deadline hurts twice: in dollars and in your entity’s standing.

The Comptroller assesses a 5 percent penalty on unpaid tax at the due date. If any tax remains unpaid more than 30 days past due, another 5 percent penalty stacks on, bringing the total to 10 percent.¹⁶ Interest accrues daily on unpaid tax at prime plus one percent from the due date until paid.¹⁷

The larger risk is forfeiture. If you fail to file a required report or pay the tax within 45 days after the Comptroller sends a notice of forfeiture, your entity loses its right to transact business in Texas. Two consequences follow: the entity can’t sue or defend itself in Texas courts, and each officer, director, partner, member, or owner can become personally liable for certain debts of the entity.¹² For most owners, that erases the entire reason the entity exists.

Confirming You’re in Good Standing

After you file and pay, check your status through the Comptroller’s Franchise Tax Account Status tool. The results show whether your entity currently has the right to transact business in Texas, and you can print the page as proof of good standing when applying for loans, signing contracts, or registering in other states.¹⁸

1
Comptroller of Public Accounts. 2026 Franchise Tax Instructions Form 05-915
2
Comptroller of Public Accounts. No Tax Due Reporting for Report Year 2024 and Later
3
State of Texas. Texas Tax Code Section 171.001 – Tax Imposed
4
Comptroller of Public Accounts. Taxable Entities – Franchise Tax Frequently Asked Questions
5
Legal Information Institute. 34 Texas Administrative Code 3.582 – Margin: Passive Entities
6
Comptroller of Public Accounts. Franchise Tax
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Comptroller of Public Accounts. Requirements for Reporting and Paying Franchise Tax
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Comptroller of Public Accounts. Identify Taxpayer – eSystems Help
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Comptroller of Public Accounts. Franchise Tax Frequently Asked Questions – Total Revenue
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Comptroller of Public Accounts. Franchise Tax Overview
11
State Automated Tax Research. Franchise Tax – Compensation Deduction Limit
12
Comptroller of Public Accounts. Texas Franchise Tax Public Information Report and Ownership Information Report
13
Comptroller of Public Accounts. File and Pay
14
Legal Information Institute. 34 Texas Administrative Code 3.9
15
Comptroller of Public Accounts. Franchise Tax Extensions of Time to File
16
Legal Information Institute. 34 Texas Administrative Code 3.584 – Margin: Reports and Payments
17
Comptroller of Public Accounts. Interest Owed and Earned
18
Comptroller of Public Accounts. Franchise Tax Account Status