Texas LLC State Tax Obligations — What You Actually Owe
Texas has no state income tax, but that does not mean zero state tax obligations. Your Texas LLC must navigate the franchise tax reporting requirement, potential sales tax collection, and various other state-level obligations. This page summarizes everything your LLC owes at the state level. For the full tax breakdown, see our Texas LLC tax guide.
Overview of Texas State Tax Obligations
| Tax/Obligation | Applies To | Amount | Deadline |
|---|---|---|---|
| Franchise Tax Report | All LLCs | $0 (under $2.65M for 2026 reports) or 0.75%/0.375% above | May 15 annually |
| Sales and use tax | LLCs selling taxable goods/services | 6.25% state + up to 2% local | Monthly/quarterly/annually |
| Employer withholding | LLCs with employees | Based on employee wages | Per payroll |
| Unemployment tax (SUTA) | LLCs with employees | 0.31% to 6.31% on first $9,000/employee | Quarterly |
| Motor vehicle tax | LLCs purchasing vehicles | 6.25% of purchase price | At time of purchase |
| Mixed beverage tax | LLCs selling liquor by the drink | 6.7% gross receipts + 8.25% sales | Monthly |
| Property tax | LLCs owning real/personal property | Varies by county (avg 1.6% of value) | January 31 |
The Franchise Tax — Your Primary State Obligation
Even though most small LLCs owe $0, you must file the annual report. See our detailed franchise tax guide for calculations, thresholds, and filing instructions.
Quick summary:
- Revenue under $2.65M (2026 threshold): file No Tax Due report, pay $0
- Revenue $2.65M-$20M: EZ computation option (0.331% of revenue)
- Revenue above threshold: 0.75% (standard) or 0.375% (retail/wholesale) of taxable margin
- Due May 15 with the Texas Comptroller
- Failure to file = forfeiture of your LLC
Sales and Use Tax
Ready to get started?
Get StartedIf your LLC sells taxable goods or specified services in Texas:
- Register for a sales tax permit with the Comptroller (free)
- Collect 6.25% state tax plus local rates (up to 8.25% combined)
- Remit collected tax on your assigned schedule (monthly, quarterly, or annually)
See our detailed sales tax guide.
Employment Taxes (If You Have Employees)
If your Texas LLC hires employees:
Texas Workforce Commission (TWC) — Unemployment insurance:
- Register with TWC within 10 days of first hiring
- Pay state unemployment tax (SUTA) on the first $9,000 of each employee's wages
- New employer rate: 2.7% (adjusts based on experience rating over time)
- File quarterly wage reports
Federal payroll obligations (via IRS):
- Withhold federal income tax from employee wages
- Withhold/match Social Security and Medicare (FICA)
- Deposit withholding quarterly or semi-weekly depending on amount
- File Form 941 quarterly, Form 940 annually
No Texas state withholding: Because Texas has no income tax, you do NOT withhold state income tax from employee wages. This simplifies payroll compared to income-tax states.
Property Tax
Texas property taxes are among the highest in the nation (averaging ~1.6% of assessed value). If your LLC owns:
- Commercial real estate
- Business personal property (equipment, computers, furniture, inventory)
You must report this to your county appraisal district and pay annual property taxes. Business personal property renditions are due April 15 each year.
What Texas LLCs Do NOT Owe
Ready to get started?
Get Started- State income tax — does not exist in Texas
- Annual report fee — no separate fee
- Corporate income tax — does not exist (even for LLCs electing C-corp treatment)
- Capital gains tax at state level — no state taxation on capital gains
- Inventory tax — Texas exempts business inventory from property tax (Freeport exemption for goods in transit)
FAQ
What is the absolute minimum my Texas LLC owes annually at the state level?
If your LLC has no employees, does not sell taxable goods/services, owns no taxable property, and has revenue under $2.47M — your only obligation is filing the Franchise Tax Report and PIR (No Tax Due form) by May 15 each year. The filing itself costs $0.
Do I need to register with the Texas Comptroller separately from the Secretary of State?
When you file your Certificate of Formation with the SOS, the information is shared with the Comptroller. You should receive a WebFile notice from the Comptroller within a few weeks of formation. For sales tax registration, you must separately apply for a sales tax permit through the Comptroller's website.
Does my LLC pay property tax on equipment?
Yes. Business personal property (computers, machinery, furniture, vehicles, inventory) is subject to local property tax in Texas. File a rendition (Form 50-144) with your county appraisal district by April 15 each year listing your business assets. The Freeport exemption may apply to inventory that leaves Texas within 175 days.
Is there a way to completely avoid all Texas state taxes?
If your LLC: (1) has revenue under the franchise tax threshold, (2) does not sell taxable goods/services, (3) has no employees, and (4) owns no taxable property — you owe nothing to Texas beyond filing the annual report. This is a realistic scenario for online service businesses, consultants, and freelancers working from home.