Texas State Tax Compliance: What Every Business Must Know in 2025
Texas state tax compliance is often misunderstood. The state has no personal income tax, but Texas businesses still face three mandatory obligations each year: the franchise tax, the sales and use tax, and the property tax rendition. Each carries its own deadline and penalty for late or missing filings. BusAcTa Advisors prepared this guide from official Texas Comptroller and Secretary of State sources as your single accurate reference for 2025 Texas compliance.
This guide is for general information only and does not constitute tax or legal advice. Consult a qualified tax professional for your specific situation.
No Personal Income Tax in Texas
Texas does not levy a personal income tax on individuals. The Texas Constitution, Article VIII, Section 24, prohibits imposing a net income tax without a statewide referendum. Texas residents owe zero state income tax on wages, self-employment income, dividends, or capital gains. Texas is one of nine states with no individual income tax as of 2025.
Texas Franchise Tax: Rates, Calculation, and Forms
The franchise tax is Texas's primary business tax, administered by the Texas Comptroller of Public Accounts. It is calculated on taxable margin derived from gross revenue, not on net income. A business reporting a federal net loss can still owe Texas franchise tax if total revenue exceeds the no-tax-due threshold.
Who must file: All entities formed in Texas or doing business in Texas, including corporations, LLCs, limited partnerships, and professional associations.
Rate | Who Qualifies | Form |
|---|---|---|
0.75% | Standard rate, most entities | 05-158-A / 05-158-B |
0.375% | Qualifying wholesale or retail trade | 05-158-A / 05-158-B |
0.331% | EZ Computation (revenue at or below $20M) | 05-169 |
No tax due | Total annualized revenue at or below $2,470,000 | 05-163 |
Sample calculation, professional services LLC:
Total Texas revenue: $3,500,000
Taxable margin (70% deduction): $3,500,000 x 70% = $2,450,000
Franchise tax at 0.75%: $2,450,000 x 0.0075 = $18,375 owed
Even when no tax is due, a No Tax Due Report (Form 05-163) must be filed by May 15. Failure to file carries a 5% penalty within 30 days and 10% after 30 days.
The Texas franchise tax uses gross revenue as its base, not net income. A business in a loss year federally can still owe franchise tax if total revenue exceeds $2,470,000.
Public Information Report and Secretary of State
Every franchise tax filer must submit a Public Information Report (Form 05-102) listing officers, directors, members, and managers. The PIR is filed with the Texas Comptroller simultaneously with the franchise tax return by May 15 each year. It is not a Secretary of State filing. For most Texas entities, no separate annual report is filed with the SOS; routine annual compliance runs entirely through the Comptroller.
Texas Sales and Use Tax
Texas imposes a 6.25% state sales and use tax on most retail sales of tangible personal property and taxable services. Local jurisdictions, including cities, counties, transit authorities, and special purpose districts, may add up to 2.0%, bringing the maximum combined rate to 8.25%. Filing frequency is assigned based on annual collected amounts:
Monthly: $500 or more collected per month
Quarterly: Less than $500 per month
Annually: Under $1,000 total per year
Texas Property Tax
Texas levies no state property tax. All property taxes are assessed and collected by local taxing units. Commercial property is appraised at 100% of market value by the county appraisal district. Businesses owning tangible personal property, including equipment, machinery, furniture, and inventory, must file a business personal property rendition with the county appraisal district by April 15 each year. Failure to render results in a 10% penalty added to the assessed value.
Texas vs. Federal Tax: Key Differences
Tax Item | Federal | Texas |
|---|---|---|
Individual income tax | 10%–37% graduated | None |
Business tax base | Net taxable income under IRC | Gross revenue (taxable margin) |
S-Corp and LLC treatment | Pass-through to owners | A franchise tax applies at entity level |
Loss year obligation | No income tax if net loss | A franchise tax may still apply if revenue exceeds the threshold. |
Depreciation | MACRS under IRC Section 168 | Not used in margin calculation |
2025 Texas Compliance Deadlines
Date | Obligation |
|---|---|
April 15 | Business personal property rendition with county appraisal district |
May 15 | Franchise Tax Report (2024 report year) and Public Information Report |
Monthly or Quarterly | Sales tax return remittance based on assigned frequency |
November 15 | Franchise tax extension deadline: 90% of tax must be paid by May 15 |
Stay Current on Texas Franchise Tax and Filing Deadlines
Texas state tax compliance centers on three annual obligations: the May 15 franchise tax return and PIR, ongoing sales tax remittances, and the April 15 property rendition. Each carries separate penalties for late or missing filings. Tracking these deadlines is the core of managing Texas business compliance each year.
If your business needs help preparing the Texas franchise tax report, PIR, or sales tax filings, contact BusAcTa Advisors for experienced state tax support.
FAQ
Frequently Asked Questions
Verified
Sources
- Texas Constitution Article VIII Section 24 prohibits imposing a net income tax on individuals without a statewide referendum. Texas Constitution and Statutes (Texas Legislature · 2025)
- Texas franchise tax standard rate is 0.75%; wholesale/retail rate is 0.375%; EZ Computation rate is 0.331%; no-tax-due threshold is $2,470,000 in total annualized revenue for 2024 report year. Franchise Tax (Texas Comptroller of Public Accounts · 2025)
- Failure to file Texas franchise tax return by May 15 carries a 5% penalty within 30 days and 10% penalty after 30 days. Franchise Tax Penalties and Interest (Texas Comptroller of Public Accounts · 2025)
- Texas state sales and use tax rate is 6.25%; local jurisdictions may add up to 2.0% for a maximum combined rate of 8.25%. Sales and Use Tax (Texas Comptroller of Public Accounts · 2025)
- Texas has no state property tax; business personal property rendition is due April 15 with the county appraisal district; failure to render results in a 10% penalty. Property Tax (Texas Comptroller of Public Accounts · 2025)
Put these insights to work in your firm.
Book a 30-minute consultation. A CPA, not a salesperson, will walk through your workflow.
Written by
Viral Patel, CPAViral Patel, CPA, CA, is co-founder of BusAcTa, where he leads operations and quality assurance. With 10+ years in U.S. individual, corporate, and partnership tax, he built BusAcTa's delivery model around one standard: offshore work that holds up to the same review a domestic senior would apply. He holds credentials in both the U.S. (CPA) and India (CA).
