taxes

Franchise Tax

The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. For more information, see Franchise Tax Overview.

Update a Franchise Tax Account

File and Pay Franchise Tax

Tax Rates, Thresholds and Deduction Limits

Franchise tax rates, thresholds and deduction limits vary by report year. Use the rate that corresponds to the year for which you are filing.

2016 and 2017
Item Amount
No Tax Due Threshold $1,110,000
Tax Rate (retail or wholesale) 0.375%
Tax Rate (other than retail or wholesale) 0.75%
Compensation Deduction Limit $360,000
EZ Computation Total Revenue Threshold $20 million
EZ Computation Rate 0.331%
Tax Rates, Thresholds and Deduction Limits for Prior Years
2015
Item Amount
No Tax Due Threshold $1,080,000
Tax Rate (retail or wholesale) 0.475%
Tax Rate (other than retail or wholesale) 0.95%
Compensation Deduction Limit $350,000
EZ Computation Total Revenue Threshold $10 million
EZ Computation Rate 0.575%
2014
Item Amount
No Tax Due Threshold $1,080,000
Tax Rate (retail or wholesale) 0.4875%
Tax Rate (other than retail or wholesale) 0.975%
Compensation Deduction Limit $350,000
EZ Computation Total Revenue Threshold $10 million
EZ Computation Rate 0.575%
2012 and 2013
Item Amount
No Tax Due Threshold $1,030,000
Tax Rate (retail or wholesale) 0.05%
Tax Rate (other than retail or wholesale) 0.1%
Compensation Deduction Limit $330,000
EZ Computation Total Revenue Threshold $10 million
EZ Computation Rate 0.575%
2010 and 2011
Item Amount
No Tax Due Threshold $1,000,000
Tax Rate (retail or wholesale) 0.05%
Tax Rate (other than retail or wholesale) 0.1%
Compensation Deduction Limit $320,000
EZ Computation Total Revenue Threshold $10 million
EZ Computation Rate 0.575%
2008 and 2009
Item Amount
No Tax Due Threshold $300,000
Tax Rate (retail or wholesale) 0.05%
Tax Rate (other than retail or wholesale) 0.1%
Compensation Deduction Limit $300,000
EZ Computation Total Revenue Threshold $10 million
EZ Computation Rate 0.575%

Due Dates

Annual Franchise Tax Reports

The annual franchise tax report is due May 15. If May 15 falls on a weekend or holiday, the due date will be the next business day.

Final Franchise Tax Reports

A Texas entity must file and pay its final franchise tax report in the year it plans to terminate, merge or withdraw with the Texas Secretary of State’s office. For out-of-state entities, the final report must be filed and paid within 60 days of that entity ceasing to have nexus in Texas. The final franchise tax report must be filed before the entity can get a Certificate of Account Status to terminate, merge or withdraw.

Penalties and Interest

Penalties
  • A $50 penalty is assessed on each report filed after the due date.
  • If tax is paid 1-30 days after the due date, a 5 percent penalty is assessed.
  • If tax is paid over 30 days after the due date, a 10 percent penalty is assessed.
Interest

Additional Resources