Every entity registered to do business in Texas, whether it’s an LLC, corporation, partnership, or other taxable entity, must file a franchise tax report with the Texas Comptroller each year. The annual deadline is May 15, and if that date falls on a weekend or holiday, the next business day becomes your due date. Even if you owe nothing, you still have a filing obligation. Here’s how the process works from start to finish.
Who Has to File
The Texas franchise tax applies to every taxable entity that is either organized in Texas or has nexus in the state, meaning it conducts enough business activity there to trigger a tax obligation. This includes corporations, LLCs, limited partnerships, professional associations, and many other business structures. Sole proprietorships and general partnerships owned entirely by natural persons are the main exceptions.
If your entity exists in the Comptroller’s records, you’re expected to file something every year, even if your revenue is zero. Ignoring the requirement can lead to penalties, and eventually the state can forfeit your entity’s right to transact business in Texas.
The No Tax Due Threshold
For the 2026 report year, entities with annualized total revenue of $2.65 million or less owe no franchise tax. If you fall at or below that threshold, you don’t need to submit a No Tax Due Report. Instead, you simply file your annual Public Information Report (PIR) or Ownership Information Report (OIR), and your franchise tax obligation is satisfied.
This simplified process took effect for reports due on or after January 1, 2024. Before that change, entities below the threshold still had to submit a separate No Tax Due Report. Now, filing just the information report is enough.
Public Information Report vs. Ownership Information Report
Alongside your franchise tax report (or in place of it, if you’re below the no tax due threshold), you must file one of two information reports every year.
- Public Information Report (PIR): Required for corporations, LLCs, limited partnerships, professional associations, and financial institutions. Filed on Form 05-102.
- Ownership Information Report (OIR): Required for all other taxable entities that don’t fall into the PIR categories. Filed on Form 05-167.
These reports collect basic details about your entity’s officers, directors, managers, or owners. They’re due even if you owe no tax. If your entity is part of a combined group, each member organized in Texas or with Texas nexus must file its own separate PIR or OIR.
Filing Through Webfile
The Comptroller’s online system, called Webfile, is the easiest way to file and pay your franchise tax. It handles the math for you and flags common errors that could otherwise trigger unnecessary billings. It’s available around the clock at the Comptroller’s file-and-pay portal.
To get started, you need two pieces of information:
- Your 11-digit Texas taxpayer number, which was assigned when your entity registered with the Comptroller.
- Your 6-digit XT Webfile number, which appears on your annual Franchise Tax notice from the Comptroller.
If you don’t have your Webfile number, call 800-442-3453 and enter your taxpayer number when prompted. The automated system will verify your identity using information from a prior report or your last payment amount, then release the number to you.
Once logged in, Webfile walks you through the report. You’ll enter your revenue figures, select your calculation method if you owe tax, and submit your PIR or OIR at the same time. Payment can also be made directly through the system.
How the Tax Is Calculated
If your annualized total revenue exceeds the no tax due threshold, you’ll calculate your tax based on your entity’s margin. Margin is the lowest of four possible calculations: total revenue minus cost of goods sold, total revenue minus compensation, total revenue times 70%, or total revenue alone. You pick whichever method produces the smallest taxable amount.
The tax rate for most entities is 0.75% of margin. Retailers and wholesalers qualify for a reduced rate of 0.375%. Webfile will guide you through choosing the correct rate and method, but it helps to have your financial records organized before you start so you can compare the four margin options and pick the most favorable one.
Filing Deadline and Extensions
The standard due date for annual franchise tax reports is May 15. If you need more time, the Comptroller will tentatively grant an extension as long as you submit a timely request with the required payment.
To qualify for an extension, you must pay at least one of the following amounts by May 15:
- 90% of the tax you’ll owe on your current year report, or
- 100% of the tax you reported on last year’s franchise tax report (as long as last year’s report was filed on or before May 14 of the current year).
The 100% option isn’t available if your entity became subject to the franchise tax during the previous year (meaning you’re filing your very first annual report) or if your entity was part of a combined group last year but is filing separately this year.
You can request the extension through Webfile or by mailing Form 05-164 with your payment. The extended due date is November 15.
EFT Payers Have Different Rules
If your entity paid $10,000 or more in franchise taxes during the previous state fiscal year, you’re required to pay electronically via EFT. Entities that paid between $10,000 and $499,999.99 can meet this requirement through Webfile. Entities that paid $500,000 or more must use the state’s TEXNET payment system with tax type code 13080, and the payment information must be completed by 8 p.m. Central Time on the business day before the due date.
EFT payers receive an initial extended due date of August 15. They can then request a second extension to November 15 by making another timely payment (through TEXNET or Webfile) on or before August 15. That second payment should cover the remaining balance of tax you expect to owe.
What Happens If You Don’t File
Failing to file your franchise tax report and information report has real consequences. The Comptroller can impose penalties and interest on unpaid tax. More significantly, the state can forfeit your entity’s right to transact business in Texas. Once forfeited, your entity can’t sue or defend a lawsuit in Texas courts, can’t maintain its legal protections, and officers or directors can become personally liable for entity debts incurred after forfeiture.
Reinstating a forfeited entity requires filing all past-due reports, paying all taxes, penalties, and interest owed, and waiting for the Comptroller to process the reinstatement. It’s far simpler to file on time, especially since entities below the $2.65 million threshold only need to submit their PIR or OIR.
Preparing to File
Before you sit down with Webfile, gather the following:
- Your 11-digit Texas taxpayer number and 6-digit Webfile number
- Your entity’s total revenue for the reporting period
- Cost of goods sold and compensation figures (if you plan to use those margin deductions)
- Current information about your entity’s officers, directors, managers, or partners for the PIR or OIR
- Your registered agent’s name and address
The reporting period for most entities covers the federal accounting year that ended in the prior calendar year. So a 2026 franchise tax report typically covers your fiscal year ending in 2025. If your entity has a non-calendar fiscal year, the period adjusts accordingly.
Once you have everything ready, log in to Webfile, follow the prompts, submit your report and information filing, and pay any tax owed. You’ll receive a confirmation when the filing is accepted. Keep that confirmation with your business records.