For 2027, the Texas Comptroller lists a $2.65 million No Tax Due Threshold based on annualized total revenue. The published rates remain 0.375% for qualifying retail or wholesale businesses, 0.75% for other taxable entities, and 0.331% for eligible entities choosing the EZ Computation method. The EZ Computation revenue limit is $20 million.
The threshold does not mean businesses below $2.65 million can simply ignore franchise tax compliance. Since the reporting changes that took effect for reports due on or after January 1, 2024, entities at or below the No Tax Due Threshold generally no longer submit the former No Tax Due Report, but many must still file either a Public Information Report or an Ownership Information Report.
Texas Franchise Tax 2027 at a glance
| 2027 item | Amount or requirement |
|---|---|
| No Tax Due Threshold | $2.65 million annualized total revenue |
| Retail / wholesale rate | 0.375% |
| Other taxable entities | 0.75% |
| EZ Computation rate | 0.331% |
| EZ Computation revenue limit | $20 million |
| Compensation deduction limit | $480,000 per person |
| Normal annual due date | May 15, adjusted to the next business day when it falls on a weekend or applicable holiday |
| No Tax Due Report | Discontinued for reports originally due on or after Jan. 1, 2024 |
| PIR / OIR | May still be required even when no franchise tax report is due |
What is the Texas franchise tax?
The Texas franchise tax is a privilege tax imposed on taxable entities that are formed or organized in Texas or that do business in the state. It is not the same as a federal business income tax, and it should not be confused with Texas sales and use tax. A business may therefore have federal filing requirements, franchise tax reporting requirements and sales tax obligations at the same time, depending on its structure and activities.
For a business owner, the practical point is that franchise tax compliance has its own definitions, thresholds, reports and deadlines. The federal tax return can provide information used in the calculation, but filing a federal return does not replace the Texas process. Likewise, extending a federal income tax return does not automatically satisfy the extension requirements for Texas franchise tax.
If your business needs professional help with the state filing itself rather than a general explanation of the rules, see /texas-franchise-tax/.
Who is subject to Texas franchise tax?
Texas applies the franchise tax broadly to taxable entities formed or organized in Texas and to taxable entities doing business in Texas. The category can include corporations, limited liability companies, partnerships and other legal entities, although exemptions and special rules can change the result in particular situations.
This is why simply saying “I have an LLC” does not answer every franchise tax question. Entity type matters, but so do annualized total revenue, Texas activity, whether the company belongs to a combined group, whether an exemption applies and whether the business falls under a special reporting provision.
A newly taxable entity generally files its first annual franchise tax report on May 15 of the year following the year in which it became subject to the tax. The accounting period reflected on that first report depends on the entity's federal accounting year and the date it became subject to Texas franchise tax.
What is the Texas franchise tax threshold for 2027?
The 2027 No Tax Due Threshold is $2.65 million in annualized total revenue. The same threshold applies to the 2026 report year.
“Annualized” is an important word. The threshold test is not always based simply on the amount appearing on a twelve-month calendar-year income statement. When the accounting period used for the report is shorter or longer than 12 months, Texas can require total revenue to be annualized for purposes of determining whether the entity falls under the No Tax Due Threshold. Annualized revenue is used for the threshold determination; it is not automatically the amount used to calculate the final tax itself.
For a business close to the $2.65 million line, this distinction matters. A company should not assume it qualifies solely because its raw revenue for a shortened reporting period was below the threshold.
If revenue is below $2.65 million, does the business still have to file?
In many cases, yes—but what it files has changed.
For report years 2024 and later, a taxable entity whose annualized total revenue is at or below the No Tax Due Threshold generally does not file a franchise tax report and does not file the old No Tax Due Report. Instead, the entity generally remains responsible for the appropriate information report: the Public Information Report (PIR) or Ownership Information Report (OIR).
This is one of the areas where outdated articles can create unnecessary confusion. Before 2024, many businesses became accustomed to filing a No Tax Due Report. That procedure changed. Seeing “no tax due” on your calculations in 2027 should therefore not be interpreted as permission to ignore the Texas Comptroller account.
There are exceptions. Certain exempt entities, qualifying new veteran-owned businesses during the applicable qualification period and passive entities can have different information-reporting rules. Those situations should be evaluated under their own provisions rather than treated as ordinary small-business filings.
PIR vs. OIR: which information report does a business file?
The Public Information Report and Ownership Information Report serve related purposes but apply to different entity types. Corporations, LLCs, limited partnerships, professional associations and financial institutions generally file the PIR. Other legally formed entities generally use the OIR.
That distinction matters even for a business that owes no franchise tax. A Texas LLC below the threshold, for example, should not conclude that a zero tax liability automatically eliminates the annual information-reporting requirement.
We develop PIR vs. OIR separately at /insights/texas-pir-vs-oir/ so this guide can stay focused on the overall filing decision.
What are the Texas franchise tax rates for 2027?
For the 2027 report year, the Comptroller publishes a 0.375% rate for qualifying retail or wholesale businesses and a 0.75% rate for other taxable entities. Eligible businesses using the EZ Computation method use a 0.331% rate.
The rate is only one part of the calculation. Under the regular calculation method, the entity generally determines taxable margin and applies the appropriate apportionment and tax rules. The method can involve deductions such as cost of goods sold or compensation, depending on the business and the requirements that apply. For 2026 and 2027, the published compensation deduction limit is $480,000 per person.
For that reason, comparing 0.75% with 0.331% and automatically choosing the smaller percentage would be misleading. EZ Computation uses a different base and gives up certain deductions and credits, so the lower nominal rate does not by itself prove that EZ Computation produces the lowest tax for a particular company.
How does EZ Computation work in 2027?
A taxable entity or combined group with annualized total revenue of $20 million or less can generally elect to use the EZ Computation report. The method applies a 0.331% tax rate after taking the applicable apportionment into account.
The trade-off is important. An entity using EZ Computation cannot take the usual margin deductions such as cost of goods sold or compensation and gives up certain credits and adjustments associated with the Long Form calculation.
This creates a practical decision rather than a simple eligibility test. A business may qualify for EZ Computation because its revenue is below $20 million but still need to compare that method with the Long Form before deciding which approach is appropriate.
When is the Texas franchise tax due in 2027?
Texas annual franchise tax reports are normally due May 15. When May 15 falls on a weekend or applicable legal holiday, the deadline moves to the next business day.
May 15, 2027 falls on a Saturday. Under the Comptroller's published weekend rule, the operative deadline should move to the next business day; businesses should verify the Comptroller's 2027 due-date calendar once published or updated for the filing season rather than relying solely on a generic calendar calculation.
Can the Texas franchise tax deadline be extended?
Texas allows extensions, but the extension requirements depend on the taxpayer's circumstances and payment obligations. Annual extension rules apply to annual reports, including first annual reports, and businesses below the No Tax Due Threshold may be able to request a no-payment extension for their PIR or OIR when filed on or before the original due date.
A federal income tax extension should not be treated as a substitute for the Texas extension process. If a business needs additional time for Texas franchise tax compliance, the extension must be addressed under the Comptroller's own rules and deadlines.
For businesses with tax due, extension requirements can also involve payments based on the amount expected to be due or prior-year liability. The correct calculation can depend on the entity's filing and payment method.
What records should be ready before preparing the franchise tax filing?
The franchise tax calculation depends on financial information, which is why bookkeeping quality matters long before the return is submitted. A business should be able to identify the accounting period covered by the report, total revenue, Texas gross receipts where relevant, and the financial information needed to support whichever filing method is used.
If the company's books are current and reconciled, this process is much easier. If several months are incomplete, the business may first need /catch-up-bookkeeping/; if the records exist but contain unreliable balances or unreconciled accounts, /bookkeeping-cleanup/ may be the more appropriate starting point. Businesses that want to avoid rebuilding their books immediately before each filing season can instead maintain the records throughout the year through /bookkeeping-services/.
What happens if a business misses its Texas franchise tax requirements?
The consequence depends on what is missing. A business can have an outstanding franchise tax report, unpaid franchise tax, a missing PIR or OIR, or some combination of those issues. The useful first step is to determine what the Comptroller shows as outstanding, which periods are affected and whether the accounting records needed to correct the filing are complete.
Texas law provides penalties and interest in appropriate delinquency situations, but the consequences are not identical for every missing document. Do not assume a generic penalty amount without checking the exact filing and period.
One 2027 change some businesses should know about
For reports originally due on or after January 1, 2027, Texas Senate Bill 2774 expanded the definition of retail trade for franchise-tax purposes to include certain industrial-uniform, industrial-garment and industrial-linen rental activities classified under specified Standard Industrial Classification codes.
This will not affect most Texas businesses, so it should not dominate a general franchise-tax guide. For companies operating in that specific industry, however, the classification can matter because qualifying retail or wholesale entities use the 0.375% rate rather than the 0.75% rate applicable to other taxable entities.
Texas Franchise Tax 2027: the practical filing decision
The most useful way to approach the 2027 filing season is to separate tax liability from reporting responsibility. Start with the entity's status and annualized total revenue. If the entity is at or below the $2.65 million No Tax Due Threshold, it generally will not owe franchise tax and generally will not file the former No Tax Due Report, but an applicable PIR or OIR may still be required. Above the threshold, the business must determine the appropriate franchise-tax report, calculation method and payment obligations.
Businesses should then confirm whether EZ Computation or the Long Form is appropriate, make sure the underlying bookkeeping supports the filing and address any extension or prior-period issues before the deadline.
AS Consulting Group provides Texas franchise tax support for businesses that need help determining the filing work applicable to their circumstances. Visit /texas-franchise-tax/ or /contact/.
Frequently asked questions
What is the Texas franchise tax threshold for 2027?
The No Tax Due Threshold for the 2027 report year is $2.65 million in annualized total revenue. Businesses at or below that threshold generally do not owe franchise tax, although applicable PIR or OIR information-reporting requirements can remain.
Does an LLC below $2.65 million still have to file in Texas?
A Texas LLC at or below the threshold generally does not file the former No Tax Due Report, but LLCs are among the entity types that generally must file a Public Information Report unless a specific exception applies.
Is the No Tax Due Report still used in 2027?
No. For reports originally due on or after January 1, 2024, the former No Tax Due Report was discontinued for entities qualifying under the revenue threshold. Those entities generally file the applicable PIR or OIR instead.
What is the Texas franchise tax rate in 2027?
The published 2027 rates are 0.375% for qualifying retail or wholesale businesses, 0.75% for other taxable entities, and 0.331% under the EZ Computation method when the entity qualifies and elects to use it.
What is the EZ Computation threshold for 2027?
The Texas Comptroller lists an annualized total revenue limit of $20 million for EZ Computation eligibility in 2027.
When is the 2027 Texas franchise tax deadline?
The normal annual deadline is May 15. Because May 15, 2027 falls on a Saturday, the Comptroller's general rule moves a weekend deadline to the next business day; the exact 2027 filing calendar should be checked when the Comptroller publishes or confirms it for that filing season.