How to File LLC Taxes in Texas (2026)
Texas has no state income tax, so your LLC's only state-level filing is with the Texas Comptroller of Public Accounts. Single-member LLCs report profit on Schedule C, and multi-member LLCs file Form 1065.
S-corp or C-corp elections move you to Form 1120-S or Form 1120, still with the IRS. Most Texas LLCs also file a Public Information Report with the Comptroller each year.
You'll owe franchise tax only once your revenue crosses a set threshold. This page covers the forms for your LLC type, the current franchise tax rate, and the other Texas taxes that can apply once you're up and running.
Quick Summary
- Your Texas LLC answers to two agencies. The IRS gets your federal return, and the Comptroller gets your yearly filing and any franchise tax.
- Check the current franchise tax threshold before assuming you owe nothing. Confirm it on the Comptroller's site since it can change.
- Talk to a CPA before you elect S-corp or C-corp status. The right choice depends on your profit level and how you plan to reinvest.
Texas LLC Tax Summary
Here's how each Texas LLC type maps to its federal form, state filing and filing deadline, before we walk through the details below.
| LLC Type | Federal Form | State Form | Filed With | Filing Deadline & Tax Rate |
|---|---|---|---|---|
| Single-member LLC | Schedule C (Form 1040) | Public Information Report (Form 05-102) + Franchise Tax Report | IRS / Texas Comptroller | May 15; 0.375%-0.75% of margin above $2,650,000 revenue |
| Multi-member LLC | Form 1065 | Public Information Report (Form 05-102) + Franchise Tax Report | IRS / Texas Comptroller | May 15; same franchise rate structure |
| S-Corp election | Form 1120-S (after Form 2553) | Public Information Report (Form 05-102) + Franchise Tax Report | IRS / Texas Comptroller | May 15; same franchise rate structure |
| C-Corp election | Form 1120 (after Form 8832) | Public Information Report (Form 05-102) + Franchise Tax Report | IRS / Texas Comptroller | May 15; same franchise rate structure |
How Texas LLCs are taxed
By default, the IRS treats every Texas LLC as a pass-through entity. Profit and loss move straight to the owners' personal returns, so the LLC itself doesn't file a separate federal income tax return.
For the general federal rules, see how LLC taxes work. Read on for what changes once you cross into Texas.
You can change that default by electing S-corp or C-corp treatment with the IRS. Texas taxes your LLC the same way no matter which election you make, because the franchise tax runs on gross margin instead of net income [1].
There's also no pass-through entity tax election here. Texas has no personal income tax to offset in the first place.
1. Single-member LLC
Your single-member LLC is a disregarded entity for federal purposes. You report its income and expenses on Schedule C with your personal Form 1040.
On the state side, you sign and file the Public Information Report yourself every year. Franchise tax only kicks in once your annualized revenue passes the no-tax-due threshold.
2. Multi-member LLC
A multi-member LLC defaults to partnership treatment. The LLC files Form 1065 and issues each member a Schedule K-1 for their share of profit and loss.
A managing member or an authorized partner signs for the LLC on the state side, covering the Public Information Report and, once revenue tops the no-tax-due threshold, the franchise tax report too.
3. S-corp election
Electing S-corp status means filing Form 2553 with the IRS. The LLC then files Form 1120-S, and each owner-employee draws a reasonable salary before taking the rest as a distribution.
The Public Information Report still needs an officer's signature after the election, and the franchise tax report joins it once revenue clears the no-tax-due threshold. The rate structure itself doesn't change.
4. C-corp election
C-corp treatment starts with Form 8832 filed with the IRS. That moves the LLC onto Form 1120 and separate corporate-level federal tax. This election adds complexity most LLC owners don't need, so it's worth modeling with a CPA before you file.
An officer rather than a member signs for the LLC here too, and the same no-tax-due threshold decides whether a franchise tax report is required alongside the Public Information Report.
Federal taxes Texas LLC owners pay
LLC owners taxed under the default pass-through rules pay federal self-employment tax of 15.3% on their net earnings, covering Social Security and Medicare [2]. Texas doesn't add a separate state-level self-employment tax on top of that.
If you expect to owe $1,000 or more for the year, the IRS wants estimated payments four times a year [3]. Due dates are April 15, June 15, September 15 and January 15 of the following year.
Missing a quarter can trigger an underpayment penalty, even if you end up due a refund when you finally file your return.
Other Texas taxes that may apply
Beyond the franchise tax, a few other Texas taxes kick in depending on how your LLC operates day to day.
1. Employer taxes
Once you hire your first employee, you need to register with the Texas Workforce Commission for unemployment tax. The 2026 UI tax rate ranges from 0.32% to 6.32%, applied to the first $9,000 each employee earns in the year [4].
2. Sales and use tax
If you sell taxable goods or services, Texas charges 6.25% state sales tax. Local jurisdictions can add up to 2% more, for a combined rate as high as 8.25% [5].
You need to apply for a Sales Tax Permit from the Comptroller before you start collecting sales tax on anything you sell.
3. Industry and local taxes
Some industries carry their own state tax on top of franchise and sales tax. Texas's hotel occupancy tax is one example.
Texas franchise tax deadlines and penalties
The Public Information Report is due every year by May 15, moving to the next business day if that date falls on a weekend or holiday.
The annual franchise tax report follows the same May 15 deadline, but only once your annualized revenue crosses the no-tax-due threshold. There's no separate annual report in Texas to track, since the Public Information Report fills that role.
Filing late costs a flat $50 penalty on top of any tax owed. Paying late adds 5% within 30 days of the due date, or 10% if you're later than that.
Interest starts accruing 61 days after the due date. If you're closing, merging or converting the LLC, file a final franchise tax report and pay what's due in the year you wind down.
Franchise tax and the annual filing add to your ongoing cost of running a Texas LLC. See what it costs to form an LLC in Texas for the full picture beyond taxes.
What is deductible for a Texas LLC
Because the franchise tax is based on margin, not gross revenue, you get to reduce your taxable base before the rate applies. The compensation deduction is capped at $480,000 per person for report years 2026 and 2027.
If your total revenue is under the EZ Computation threshold, you can skip the margin math entirely and pay a flat rate on total revenue instead, which is often simpler for smaller LLCs. On the federal side, the qualified business income deduction under Section 199A can lower your personal tax bill, but that's a federal deduction claimed on your 1040 instead of a Texas credit.
References:
- https://comptroller.texas.gov/taxes/franchise/
- https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes
- https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
- https://www.twc.texas.gov/programs/unemployment-tax/your-tax-rates
- https://comptroller.texas.gov/taxes/sales/
FAQs
Do I Have to Pay an Annual Fee for My LLC in Texas?
No, you don't pay an annual fee for your LLC in Texas. Instead, you file a yearly Public Information Report, and the Comptroller only bills franchise tax once your business tops $2,650,000 in annual revenue.
What Is a Franchise Tax in Texas?
A franchise tax in Texas applies to any LLC formed in the state or doing business here, even if you live elsewhere. The Comptroller taxes your margin rather than your gross revenue, applying a rate that depends on your industry.
How Do I Choose the Right Tax Classification for My Texas LLC?
Choosing the right tax classification for your Texas LLC usually comes down to profit level and reinvestment plans. S-corp treatment can lower self-employment tax once profit is high and steady, while C-corp treatment rarely makes sense unless you're raising outside investment or reinvesting most earnings back into the business.
