Every year I meet a San Antonio business owner who is certain they have nothing to do about franchise tax, because they are nowhere near owing any. They are half right, and the half they have wrong is the expensive half.
Texas franchise tax has two separate obligations hiding inside it: owing and filing. Being small takes care of the first one. It does not touch the second.
The number that makes people relax
For report years 2026 and 2027, the no tax due threshold is $2,650,000 in annualized total revenue. At or below that, your franchise tax is zero.
For 2024 and 2025 the same threshold was $2,470,000. It moves, so if you are cleaning up an old year, use the figure for that report year rather than today’s.
That covers the overwhelming majority of small businesses I work with. Nobody with a two-person operation is paying Texas franchise tax.
Which is exactly why the filing requirement catches people. The tax bill is zero, so the whole subject files itself under “does not apply to me,” and the report that is still due goes unfiled for years.
What you actually file when you owe nothing
Regardless of your revenue, you file an information report every year:
- Public Information Report, Form 05-102 if you are a corporation, an LLC, a limited partnership, a professional association or a financial institution.
- Ownership Information Report, Form 05-167 if you are any other legally formed entity.
Most small businesses here are LLCs, so in practice it is the PIR.
If you are at or below the threshold, that report is the entire job. No EZ Computation, no Long Form, no payment.
Above the threshold, you file the EZ Computation Report or the Long Form and the information report, and you pay what is due.
One trap worth naming: the standalone No Tax Due Report went away for report year 2024 and later. If you last dealt with this a few years ago, you may go hunting for a form that no longer exists, not find it, and conclude there was nothing to file. There was.
The deadline
May 15, every year. If it lands on a weekend or holiday it moves to the next business day.
Put it in your phone now, with a warning a week out. It is the same date every year, which sounds easy to remember and is precisely why it gets missed.
What skipping it actually costs
This is where it stops being paperwork.
The first thing that arrives is a Notice of Intent to Forfeit Right to Transact Business. That is a warning, and it is fixable.
If it goes unresolved, your entity’s right to transact business in Texas is forfeited. Three consequences follow, and none of them are small:
- The forfeiture is published on the Comptroller’s public website, where anyone doing diligence on you can read it.
- Your entity is generally denied the right to sue or defend itself in a Texas court. That is the one that turns a missed form into a real problem, because you find out about it on the day you are trying to enforce a contract or defend a claim.
- Each officer, director, partner, member or owner becomes liable for certain debts of the entity. The liability shield you formed the entity for is exactly what stops protecting you.
Further along, a Notice of Forfeiture of Registration means your registration is forfeited with the Secretary of State. Reinstating then requires meeting the franchise tax filing requirements and obtaining a tax clearance letter to file with the SOS. It is recoverable, but it is now a project rather than a form.
There is also a flat $50 penalty on each report filed after the due date. If tax is owed and paid 1 to 30 days late, add a 5 percent penalty; more than 30 days late, 10 percent. Interest starts 61 days after the due date. For most small businesses the $50 is the whole exposure, which is worth saying plainly: the penalty is not what should worry you. The forfeiture is.
If you are already behind
Nothing here is unrecoverable, and the fix is more boring than owners expect.
- Find out where you actually stand. The Comptroller’s Account Status lookup will tell you what is on file and what is not. Do this before assuming the worst; plenty of people who think they are years behind are one report short.
- File the missing years. Each year gets its own report, using that year’s threshold.
- Pay the $50 per late report, plus any tax, penalty and interest if you were above the threshold in a given year.
- If registration was forfeited, get the tax clearance letter and file for reinstatement with the Secretary of State.
You will need your 11-digit taxpayer number, and for Webfile an eight-digit Webfile number beginning with XT. If you cannot find the Webfile number, it is printed at the top of any notice they have mailed you.
The bookkeeping connection
The reason I care about this as a bookkeeper rather than a filer is that the report asks for a revenue figure, and a surprising number of owners genuinely do not know theirs.
If your books are months behind, you cannot answer the one question the report is built around, so the filing gets postponed until you “sort the books out,” and then May 15 passes. The missed deadline is usually a symptom. The books are the cause.
If that is where you are, start with catching the books up, then file. In that order, the report takes about fifteen minutes.
The short version
If your revenue is under the threshold you owe nothing, and you still file a Public Information Report or an Ownership Information Report by May 15. It costs you a few minutes. Skipping it can cost you your entity’s good standing, your access to Texas courts, and the personal liability protection you formed the entity to get.
If you are behind and would rather not work out which years are missing on your own, send me three months of statements and I will build you a real Profit and Loss, free, and we can look at where the filings stand while we are in there.
Thresholds, forms and penalties above reflect the Texas Comptroller’s published guidance for report years 2024 and later, current as of August 2026. Figures change by report year. Verify anything you are relying on against the Comptroller’s site, or ask me and I will look at your specific account.