Texas LLC Taxes (2026)

Understand Texas LLC taxes in 2026, including federal classification, state tax registration, sales tax, payroll accounts, recurring fees, and local obligations.

Texas does not have individual income tax, but a Texas LLC can still have tax and filing obligations. The main issues are franchise tax reporting, Public Information Report, sales tax permits, employer taxes, federal income tax, and local or industry requirements.

Educational note: This guide is for general informational purposes only. It is not legal, tax, accounting, or financial advice. Confirm current requirements with the IRS, Texas Comptroller, Texas Workforce Commission, and qualified professionals.

First tax decision

For many Texas LLCs:

File Certificate -> get EIN if needed -> register for sales tax if required -> track franchise tax/PIR by May 15 -> handle payroll if hiring

Franchise tax

Texas franchise tax applies to many taxable entities, including LLCs. For reports originally due in 2026, the Comptroller lists a $2.65 million no-tax-due threshold.

If the LLC is below the threshold, tax due may be $0, but that does not mean all Comptroller filings disappear. Texas still requires information reports from many entities.

Public Information Report

Texas LLCs commonly file a Public Information Report with franchise tax reporting. The PIR reports information such as officers, directors, members, managers, and addresses depending on entity type and form instructions.

Do not treat the PIR as optional just because franchise tax money is $0.

Sales tax

Texas sales tax registration is separate from formation. A sales tax permit may be required if the LLC sells taxable items or taxable services.

The Comptroller says there is no fee for a Texas sales tax permit.

Federal tax classification

An LLC is a state legal entity, but federal tax classification is separate.

Payroll and hiring

If the LLC hires employees, review:

• EIN
• Federal payroll tax
• Texas unemployment tax
• New hire reporting
• Payroll records
• Workers’ compensation and industry requirements

Common tax mistakes

Thinking no individual income tax means no filings

Texas has no individual income tax, but franchise tax, PIR, sales tax, payroll, federal tax, and local obligations can still matter.

Ignoring PIR

Even when no franchise tax money is due, information reports can still apply.

Confusing sales tax and franchise tax

Sales tax permit returns and franchise tax reports are separate.

Forgetting other states

If the business operates outside Texas, another state may impose registration, income tax, sales tax, payroll, or annual report rules.

Tax FAQ

Does Texas have state income tax?

Texas has no individual income tax.

Does a Texas LLC pay franchise tax?

Texas LLCs are generally taxable entities for franchise tax purposes unless an exception applies. Whether tax money is due depends on revenue and calculations.

What is the 2026 no-tax-due threshold?

$2.65 million in annualized total revenue for reports originally due in 2026.

Is Texas sales tax permit free?

The Comptroller says there is no fee for a sales tax permit.

Is EIN free?

Yes, when obtained directly from the IRS.

Official resources

• Texas Comptroller franchise tax reports
• Texas Comptroller franchise tax rates and thresholds
• Texas Public Information Report form
• Texas Comptroller sales tax permit FAQ
• Texas Workforce Commission unemployment tax
• IRS EIN application