Cost to Form a Texas LLC (2026 Breakdown)
Understanding the true cost of forming and maintaining a Texas LLC is essential before you begin the formation process. Texas has one of the higher initial filing fees among US states at $300, but ongoing costs are among the lowest because there is no annual report fee and no state income tax.
Formation Costs (One-Time)
| Item | Cost | Notes |
|---|---|---|
| Certificate of Formation (Form 205) | $300 | Required — filed with Secretary of State |
| Name reservation (Form 501) | $40 | Optional — reserves name for 120 days |
| Certified copy of Certificate | $15 | Optional — official stamped copy |
| Certificate of Filing | $15 | Optional — formal proof of filing |
| Assumed Name Certificate (DBA) | $25-$50 | Only if operating under a different name (filed with county clerk) |
Minimum cost to form: $300 (just the Certificate of Formation filing fee).
Ongoing Annual Costs
| Item | Cost | Due Date | Filed With |
|---|---|---|---|
| Franchise Tax Report | $0 (under threshold) | May 15 annually | Texas Comptroller |
| Public Information Report | $0 | May 15 annually | Texas Comptroller |
| Registered agent service | $99/year (our service) | Annual renewal | N/A (private service) |
Key point: Texas has no separate "annual report fee." The Franchise Tax Report and Public Information Report are filed together with the Texas Comptroller (not the Secretary of State) by May 15 each year. If your LLC's annualized total revenue is under $2.47 million (2025 threshold), you file a "No Tax Due" report and owe $0 in franchise tax.
The Texas Franchise Tax (Margin Tax) Explained
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Get StartedDespite the name, the Texas franchise tax is actually a margin tax on revenue — not a traditional franchise fee. Here is how it works:
Who owes it:
- LLCs with total annualized revenue exceeding the no-tax-due threshold ($2.47 million for 2024-2025 reports, increased to $2.65 million for 2026-2027 reports)
- The threshold adjusts periodically: it was $1.23 million through 2023, raised to $2.47 million for 2024-2025, then $2.65 million for 2026-2027
Rates (if above threshold):
- 0.375% — retail and wholesale businesses (NAICS codes starting with 44, 45, or 42)
- 0.75% — all other businesses
- Applied to the LLC's "taxable margin"
Filing requirement:
- Even if you owe $0, you must still file the report by May 15 each year
- New LLCs formed during the year: first report is due May 15 of the following year
- Missing the deadline results in penalties and eventual forfeiture of the right to transact business
Cost Comparison: Texas vs. Other States
| State | Formation Fee | Annual/Biennial Fee | State Income Tax |
|---|---|---|---|
| Texas | $300 | $0 (Franchise Tax Report) | None |
| California | $70 | $800 franchise tax + $20 SOI | 1%-13.3% |
| Delaware | $90 | $300 annual tax | None on out-of-state income |
| Wyoming | $100 | $60 annual report | None |
| Florida | $125 | $138.75 annual report | None |
| New York | $200 | $9 biennial + publication ($300-$2,000) | 4%-10.9% |
Texas analysis: Higher formation fee than most states, but the $0 ongoing cost and no state income tax makes it one of the cheapest states for long-term LLC maintenance — especially compared to California's mandatory $800/year or New York's publication requirement.
Hidden Costs to Consider
- Registered agent service — Unless you serve yourself (exposing your home address), budget $99-$300/year for a professional service.
- Business licenses — Vary by city and industry. Houston, Dallas, and San Antonio each have their own requirements.
- Assumed Name Certificate — If your LLC operates under a name different from its legal name, file with the county clerk ($25-$50 depending on county).
- Operating agreement — Free if you draft your own. $500-$2,000 if you hire an attorney. Critical for multi-member LLCs.
- Amendment fees — If you need to change your Certificate of Formation later, Form 424 costs $150.
- Texas sales tax permit — Free to obtain from the Comptroller, but you must collect and remit sales tax if selling taxable goods or services (6.25% state + up to 2% local).
FAQ
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Get StartedIs the $300 filing fee refundable if my LLC is rejected?
No. The filing fee is non-refundable regardless of outcome. If your filing is rejected (usually for a name conflict or missing information), you must fix the issue and refile with another $300 payment.
What happens if I do not file the Franchise Tax Report by May 15?
The Texas Comptroller assesses penalties and interest. Continued non-filing results in the Comptroller notifying the Secretary of State, who will then forfeit your LLC's right to transact business in Texas. Reinstatement requires paying all back taxes, penalties, and interest plus filing all delinquent reports.
Does Texas charge more for multi-member LLCs?
No. The filing fee is $300 regardless of how many members your LLC has. There is no per-member surcharge.
Can I reduce my franchise tax obligation?
Yes. Choose the calculation method that produces the lowest taxable margin: 70% of total revenue, total revenue minus COGS, total revenue minus compensation, or the $1 million flat deduction. Consult a CPA for optimization. Also, the "EZ computation" rate of 0.331% may be available for businesses under $20 million in total revenue.