Texas Franchise Tax Calculator for 2026 and 2027 Reports

For 2026 and 2027 reports, an entity whose annualized total revenue is $2,650,000 or less owes no franchise tax, according to the Texas Comptroller. That test uses total revenue for the whole entity (or combined group), rather than Texas sales alone.

Owing nothing is not the same as filing nothing. Since 2024 reports, entities at or below the threshold no longer file a No Tax Due Report, and the Comptroller states the No Tax Due Report is not available for 2026 reports. They must still file a Public Information Report (Form 05-102) for corporations and LLCs, or an Ownership Information Report (Form 05-167) for other entities such as partnerships. Skipping the PIR or OIR can lead to forfeiture of the right to transact business in Texas.

Above the threshold, the calculator computes taxable margin and tax under the long form and, where you qualify, the EZ computation.

Margin is the lowest of four amounts, and the entity picks the method each year:

For the compensation deduction, wages and cash compensation are capped per person at $480,000 for 2026 and 2027 reports, per the Comptroller's deduction limits. Benefits such as health insurance and retirement contributions are added on top of the capped amount.

Texas defines COGS narrowly and in its own way (Tax Code §171.1012). Service and software companies often cannot use it, which is why many startups end up on the compensation method. The calculator lets you enter both and picks the lower margin.

Margin is apportioned to Texas with a single gross receipts factor: Texas gross receipts divided by gross receipts everywhere. Taxable margin is margin times that percentage.

The rate on taxable margin is 0.75% for most entities and 0.375% for entities primarily engaged in retail or wholesale trade.

The EZ computation is the alternative. An entity with total revenue of $20 million or less can elect to pay 0.331% of apportioned revenue, with no deduction for COGS or compensation. The trade-off is that EZ filers cannot claim credits, including the Texas research credit. The calculator shows both numbers so you can see which is lower.

Take a hypothetical software company with $6,000,000 of total revenue, $3,200,000 of compensation and benefits (no one above the $480,000 cap), no Texas COGS, and $1,500,000 of receipts from Texas customers.

• 70% of revenue: $4,200,000
• Revenue minus compensation: $6,000,000 minus $3,200,000 = $2,800,000
• Revenue minus $1 million: $5,000,000

The lowest margin is $2,800,000. Apportionment is $1,500,000 / $6,000,000 = 25%, so taxable margin is $700,000. At 0.75%, the long-form tax is $5,250.

Under the EZ computation, apportioned revenue is $6,000,000 x 25% = $1,500,000, and 0.331% of that is $4,965. EZ wins by $285 here, unless the company has credits it wants to claim on the long form. Change the compensation figure and the answer can flip, which is the reason to run both.

The estimate assumes a single entity with clean revenue numbers. It does not model:

• Combined group reporting for affiliated entities (Form 05-166)
• Detailed revenue exclusions, such as flow-through funds and certain pass-through amounts
• The full COGS rules for which costs qualify
• Credits, including the research and development credit
• Tiered partnerships and passive entities
• Penalties for late filing or late payment

If you have a combined group or more than one Texas entity, treat the result as a starting point and have the return prepared from the actual books.

Reports are due May 15 each year. When that falls on a weekend or holiday, the due date moves to the next business day, so the 2027 report is due Monday, May 17, 2027.

• Long form: Form 05-158-A and 05-158-B (the form searchers call 05-158)
• EZ computation: Form 05-169
• Public Information Report: Form 05-102, or Ownership Information Report: Form 05-167
• Extension: Form 05-164, which moves the annual report to November 15 if you pay by the original due date either 90% of the tax due with the current report or 100% of the prior year's tax (the 100% option is not available on a first annual report)

Entities that paid $10,000 or more in the prior state fiscal year must pay by electronic funds transfer. This is a planning estimate, not tax advice for your specific facts.