Texas LLC Franchise Tax (Margin Tax): No-Tax-Due Threshold and Public Information Report

What Is the Texas Franchise Tax (Margin Tax)?

The Texas franchise tax is a tax on the privilege of doing business in Texas, administered by the Texas Comptroller of Public Accounts. It applies to most taxable entities formed or doing business in the state, which generally includes limited liability companies (LLCs), corporations, and limited partnerships. It is commonly called the margin tax because, when tax is owed, it is calculated on a base called the taxable margin rather than on simple net income.

Texas is widely known as a no-income-tax state, and that is true for personal income. The franchise tax is the separate, entity-level obligation that funds part of the state, and it is the main recurring state-level filing a Texas LLC deals with. It is reported annually, and the report is due in the spring of each year. Because rules and amounts change, confirm the current details with the Texas Comptroller before you budget.

• Who it applies to. Most taxable entities formed in Texas or doing business in Texas, including LLCs, corporations, and limited partnerships.
• What it is based on. A base called taxable margin when tax is owed, which is why it is called the margin tax.
• How it is administered. By the Texas Comptroller of Public Accounts, separate from the Secretary of State that handles formation.

Does Your Texas LLC Have to Pay It? (No-Tax-Due Threshold)

This is where many founders get tripped up. Texas sets a no-tax-due threshold based on annualized total revenue. If your Texas LLC's annualized total revenue is at or below that threshold, the franchise tax you owe is generally zero. The threshold has been raised over time, and figures circulating online vary, so treat any specific number you see as something to verify rather than rely on.

The critical point is that being under the threshold means you owe no tax, not that you have no filing obligation. Whether the Comptroller requires a separate no-tax-due report, and how the Public Information Report fits, has changed in recent years. The safe assumption is that a filing of some kind is still expected even at zero tax. Confirm exactly what your LLC must file, and the current threshold amount, directly with the Texas Comptroller.

Because the threshold is revenue-based, a new or low-revenue LLC will commonly owe zero tax while still carrying a filing duty. As your revenue grows past the current threshold, the calculation in the next sections starts to matter. Plan your compliance calendar around the filing first, then the tax.

Texas Franchise Tax Rates

When tax is owed, Texas applies a rate to your taxable margin, and the rate depends on what kind of business you run. There is a lower rate for entities primarily engaged in retail or wholesale trade, and a standard rate for everyone else. There has also historically been a simplified approach for smaller entities. The figures below are approximate and the Comptroller sets the current rates, so verify them before you calculate anything.

The retail and wholesale rate is roughly half the standard rate, so how your business is classified can meaningfully change the result. The classification depends on the nature of your activity, not just your preference, and edge cases exist. If your LLC sits near a line between retail, wholesale, and services, confirm the correct rate and classification with the Texas Comptroller or a tax professional.

How Taxable Margin Is Calculated

When your revenue is above the no-tax-due threshold and tax is owed, the rate applies to your taxable margin, not your total revenue. Texas lets you arrive at margin in more than one way and generally allows you to use the method that produces the lowest result. The commonly described options are summarized below, but each has its own rules and definitions, so use them as a map rather than a calculator.

• Total revenue times 70%. Take total revenue and multiply by approximately 70%, using the remainder as your margin.
• Total revenue minus Cost of Goods Sold (COGS). Subtract qualifying Cost of Goods Sold (COGS) from total revenue, where eligibility for COGS is defined by Texas rules.
• Total revenue minus compensation. Subtract compensation, where the deduction per person is generally capped at an amount the Comptroller sets and adjusts over time.
• Total revenue minus $1 million. Subtract a fixed amount, commonly described as around $1 million, from total revenue.

There has also historically been an EZ computation, a simplified method available to entities under a certain revenue level that applies a lower rate to apportioned revenue without working through full margin deductions. The eligibility ceiling and the EZ rate are set by the Comptroller and have changed over time. The per-person compensation cap, the COGS definitions, and the EZ figures are all approximate here, so confirm the current numbers with the Texas Comptroller.

Public Information Report (PIR) and the May 15 Deadline

Alongside the franchise tax report, most Texas LLCs must file a Public Information Report (PIR) with the Texas Comptroller. The franchise tax report and the Public Information Report are generally due each year by May 15. The PIR keeps the state's record of your LLC current, and, as the name says, it is public, which is the part founders most often overlook.

The Public Information Report collects current details about the LLC, including the names and addresses of managers or members and the principal business address. Because it is a public record, the addresses you list can be viewed by anyone who looks up your LLC through the state. That is the same dynamic many founders run into in other states, and it is the reason the address on the PIR deserves a deliberate choice.

Texas vs California: Threshold vs $800 Flat

Founders deciding where to base a multi-state operation often weigh Texas against California, because the two states handle the franchise tax very differently. The contrast is one of the clearest reasons some founders prefer a no-income-tax home base like Texas, while others stay closer to where they actually operate. The table below is a high-level comparison, and the amounts are approximate.

The headline difference is that a low-revenue Texas LLC can often owe zero franchise tax while a California LLC generally owes the $800 minimum no matter what. That does not automatically make Texas cheaper overall, because where you actually do business can still create obligations in another state. For the California side in detail, see the California franchise tax guide, and for a wider look at picking a formation state, the best states to form an LLC comparison lays out the tradeoffs.

Your Business Address on the PIR: Where Multi-State Founders Fit

Because the Public Information Report is public and ties into your state record, the address you list is worth a deliberate decision rather than a default. For remote founders, an out-of-state owner, or anyone running a Texas LLC from a laptop, the easy move is to use a home address. The cost of that convenience is that your home becomes part of a searchable public record, and changing it later means an updated filing while third-party databases that copied it may lag behind.

• Public exposure. The Public Information Report is searchable, so a home address on it can surface in business databases, marketing lists, and casual lookups.
• Multi-state flexibility. A no-income-tax home base like Texas appeals to founders who operate across several states, and a real business address keeps your home off the record while you do.
• Consistency. Using one real business address across formation, the EIN, the bank account, and the Public Information Report avoids mismatches that banks and the state may flag.

save office does not maintain a directly operated address in Texas, so this is about how you use a real US business street address across a multi-state setup rather than a Texas-specific location. Many multi-state founders keep a consistent business address in one of the cities save office does serve and pair it with their Texas filing strategy, so their home stays off public records across states. The point is flexibility for founders who are not tied to a single state.

Before you commit any address to a state filing, confirm it is a real, deliverable street address. You can run an address through the free Address Checker to verify it before you file. If a real US business address is the missing piece in your multi-state setup, save office onboarding walks through picking a city and activating the address.

A Texas LLC's franchise tax is friendlier to low-revenue businesses than many founders expect, but the filing duty is stricter than the tax bill suggests. If your annualized revenue is below the current no-tax-due threshold, your tax is generally zero, yet you still have to file with the Comptroller, including the Public Information Report, by May 15. When revenue climbs past the threshold, you apply an industry rate, roughly 0.375% for retail and wholesale or 0.75% for everyone else, to a taxable margin you can compute several ways and choose the lowest. Verify the current threshold, rates, and margin figures directly with the Texas Comptroller, treat the franchise tax report and the Public Information Report as one May 15 obligation, and choose a real business street address for the public filing so your home stays off the record. Handle those pieces and the annual upkeep of a Texas LLC becomes routine rather than a source of penalties.