Texas LLC Franchise Tax: The $2.47M Threshold and What Changed in 2024

Most Texas LLCs owe zero franchise tax. The no-tax-due threshold is $2,470,000 — and if your annual revenue falls below that number, you pay nothing. What changed in 2024 is how you report it: the No Tax Due Report was permanently eliminated. Here is what you file now, when it is due, and what happens if you miss it.

"For the 2024 report year and later, a taxable entity whose annualized total revenue is less than or equal to the No Tax Due Threshold is not required to file a No Tax Due Report. However, the entity is required to file Form 05-102, Public Information Report or Form 05-167, Ownership Information Report." — Texas Comptroller of Public Accounts, official guidance on SB 3 franchise tax changes. comptroller.texas.gov/taxes/franchise/ntd-rpt-updates-2024.php (verified April 2026)

1. What Is Texas Franchise Tax?

Texas does not impose a traditional corporate income tax. Instead, it imposes a franchise tax — a privilege tax for the right to do business in the state. Most entities, including LLCs, are subject to it regardless of whether they are profitable. What varies is whether they owe any amount based on their revenue level.

The franchise tax is calculated on "taxable margin," which is the lesser of several formulas: total revenue minus cost of goods sold, total revenue minus compensation, 70% of total revenue, or total revenue minus $1 million. The applicable rate is then applied to whichever calculation produces the lowest taxable margin.

For the vast majority of small Texas LLCs, the math never gets that far — because their total revenue falls below the threshold where any tax is owed at all.

2. The $2.47M Threshold — You Probably Don't Owe

Senate Bill 3, passed by the Texas Legislature in July 2023, made two major changes effective for the 2024 report year and beyond:

1. It doubled the no-tax-due threshold from $1.23 million to $2.47 million.
2. It eliminated the No Tax Due Report filing requirement entirely for entities below that threshold.

For context, $2.47 million in annual revenue is well above where most early-stage and small businesses operate. A single-member LLC with a few rental properties, a service business with one or two employees, or a holding company with modest income almost certainly falls below this line.

If your revenue is near the threshold or if you have complex deductions, consulting a Texas-licensed CPA is the appropriate next step — the margin tax calculation has nuances that warrant professional review.

3. The 2024 Change: No Tax Due Report Eliminated

Prior to 2024, an LLC under the no-tax-due threshold still had to file the No Tax Due Report (Form 05-163) each year — essentially a zero-balance return confirming the entity owed nothing. This requirement was eliminated by SB 3.

The Texas Comptroller's office officially discontinued Form 05-163 starting with the 2024 report year. The form is no longer available for any new reporting periods. This is a material change that many existing Texas LLC owners have missed, particularly those using older CPA software or relying on guides written before July 2023.

If you have been filing a No Tax Due Report out of habit, you no longer need to. If you were unsure whether to file anything at all, the answer is now clearer: file the Public Information Report by May 15 instead.

4. What You DO File: The Public Information Report (PIR)

The Public Information Report (Form 05-102) is what entities below the $2.47M threshold file in place of the No Tax Due Report. It is a compliance disclosure — not a tax return — listing the LLC's officers, directors, or managers, along with their mailing addresses.

Key facts about the PIR:

• Filed annually with the Texas Comptroller of Public Accounts (not the Secretary of State)
• Due May 15 each year
• No tax payment accompanies it if your revenue is below $2.47M
• Required even if the LLC had zero activity during the year
• Must list at least one officer, director, or member with a mailing address
• Can be filed online through the Comptroller's eSystems portal at no charge

Entities with revenue above the $2.47M threshold file either the EZ Computation Report or the Long Form, and they include a PIR as part of that submission. Single-member LLCs classified as disregarded entities for federal tax purposes are still subject to Texas franchise tax at the state level — Texas does not follow federal check-the-box treatment for this purpose. This is a nuance worth confirming with a Texas CPA before assuming your LLC owes nothing.

5. Filing Deadlines: May 15

Texas franchise tax reports — including the PIR — are due May 15 of each year. The report year generally corresponds to the prior calendar year. For example, the 2025 report (covering 2024 activity) is due May 15, 2025.

Extensions are available. Filing an extension moves the deadline to October 15. However, an extension to file is not an extension to pay. Any franchise tax owed is still due by May 15 even if the return is extended — late payment triggers penalties and interest regardless of whether the return itself is timely filed with an extension.

6. Common Mistakes That Trigger Penalties

The franchise tax system is designed to be manageable for small businesses — but the same simplicity that makes compliance easy makes it easy to overlook. These are the most common mistakes:

Treating "no tax owed" as "no filing required"

Even with revenue well below $2.47M and zero tax owed, you are still required to file the Public Information Report by May 15. The PIR is a separate compliance obligation from the tax itself. Missing it can put your LLC in "not in good standing" status, which affects your ability to open bank accounts, close real estate transactions, and qualify for certain contracts.

Filing with the Secretary of State instead of the Comptroller

Annual reports in most states go to the Secretary of State. In Texas, the franchise tax report and PIR go to the Texas Comptroller of Public Accounts. These are separate agencies. Filing the wrong document with the wrong agency does not satisfy the obligation.

Using the old $1.23M threshold

Some tax guides and even some CPAs still reference the pre-SB 3 threshold of $1.23 million. If your revenue falls between $1.23M and $2.47M, SB 3 may have eliminated your franchise tax obligation starting in 2024. It is worth verifying with your CPA if this applies to your situation.

Assuming a single-member LLC has no franchise tax exposure

Texas imposes franchise tax on LLCs regardless of how they are classified for federal income tax. A single-member LLC treated as a disregarded entity at the federal level is still a "taxable entity" under Texas law unless a specific exemption applies. Consult a licensed Texas attorney or CPA to confirm your status before filing nothing.

7. When to Consult a CPA

This article is designed to explain the franchise tax rules and clarify the 2024 changes. It is not a substitute for professional tax advice. Specifically, consider consulting a Texas-licensed CPA or business attorney if:

• Your revenue is near the $2.47M threshold and may vary year to year
• You own multiple LLCs and need to understand combined reporting rules
• Your LLC conducts business in Texas but was formed in another state
• You are a real estate investor evaluating whether rental income is subject to franchise tax
• You have missed prior year filings and need to understand the correction and penalty abatement process

The Texas Comptroller's taxpayer helpline is available at (800) 252-1381 for general questions. For advice specific to your situation, consult a licensed professional — the franchise tax rules are detailed enough that general guidance has real limits.

Sources: Texas Comptroller of Public Accounts — official SB 3 franchise tax guidance, comptroller.texas.gov/taxes/franchise/ntd-rpt-updates-2024.php (verified April 2026); Texas Senate Bill 3, 88th Legislature, 3rd Called Session (July 2023) — threshold increase and No Tax Due Report elimination; Texas Comptroller franchise tax forms page, comptroller.texas.gov/taxes/franchise/forms/2024-franchise.php. Last reviewed April 2026. This article is designed to be educational and is not a substitute for legal or tax advice — consult a Texas-licensed CPA or attorney for guidance specific to your situation.