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Franchise tax preparation is essential for businesses to remain compliant with state laws. It involves calculating and paying an annual tax based on the size, revenue, or net worth of the business, depending on state-specific rules.
The Texas franchise tax is imposed on corporations, LPs, and LLPs based on their annual income. Many business owners, especially LLCs, may be less familiar with this state tax. Reports are due annually to the Texas Comptroller, with a May 15 filing deadline and a November 15 extension for filing, though payment is still due by May 15.
In July 2023, the legislature passed Senate Bill 3, which increased the no tax due threshold and eliminated reporting requirements for certain entities. In response, the Comptroller’s office has changed the way some entities have to report for franchise tax purposes.
No Tax Due Threshold Increased to $2.47 Million
For reports originally due on or after January 1, 2024, the no tax due threshold is increased to $2.47 million.
Taxpayers Under the No Tax Due Threshold
For reports originally due on or after Jan. 1, 2024, a taxable entity whose annualized total revenue is less than or equal to $2.47 million is no longer required to file a No Tax Due Report.