Texas Small Business Taxes Explained: Franchise Tax, Sales Tax, Property Tax and Why There's No State Income Tax

Yes, we wrote this so DFW business owners searching for "Texas small business taxes" would find us. Here's the real answer, from a CPA who files these returns for local owners.

Texas has a reputation as a low-tax state. That's partly true. There's no personal state income tax, but Texas still has its own set of business taxes, and each one runs on a different calendar with a different agency.

This guide walks through every one of them in plain English. You'll see who owes what, the current figures straight from the agencies that set them, and what to do this year so nothing sneaks up on you.

01

Why Texas Has No State Income Tax (and What That Means for You)

Texas doesn't tax personal income. If you run a sole proprietorship, a single-member LLC or a partnership, the profit that flows to your personal return isn't taxed by the state.

That's real money in your pocket compared to owners in most other states. But it changes where your attention should go.

Because there's no state return eating into your profit, your federal return is the big one. Your federal income tax and self-employment tax are usually the largest tax bills you'll see each year.

So when a DFW owner asks us how to lower their taxes, the answer almost always lives on the federal side. That means retirement contributions, timing of equipment purchases, clean deductions and paying the right estimates on time. We cover those moves in our guide to small business tax strategies for DFW owners.

Moji's take

“No state income tax doesn't mean no state paperwork. Texas collects from businesses in other ways. Owners who know the four or five state filings and plan the federal side well are the ones who stop getting surprised.”

Here's what Texas does have:

Let's sort out which ones apply to you.

02

Which Texas Taxes Apply to My Business?

Start with four questions. Your answers tell you which filings belong on your calendar.

Decision guideWhich Texas Taxes Apply to My Business?

StartYou run a business in Texas.

Question 1Is your business an LLC, corporation, limited partnership or other entity that limits your liability?

YesYes -> "Franchise tax: file a Public Information Report or Ownership Information Report every May 15. File a franchise tax report too if annualized total revenue is above $2.65 million (2026 and 2027 reports).

NoNo (sole proprietor, not legally organized to limit liability) -> "Not a franchise taxable entity. Move to Question 2.

Question 2Do you sell goods, or a service on the Comptroller's taxable services list?

YesYes -> "Sales tax: get a free sales and use tax permit, collect tax and file returns on the schedule the Comptroller assigns (monthly, quarterly or yearly). Returns are due the 20th.

NoNo -> "No sales tax permit needed for those sales. Watch for use tax on taxable items you buy without paying Texas tax.

Question 3Do you own equipment, furniture, inventory or other property used to make income?

YesYes, over $125,000 at one location -> "Render it with your county appraisal district by April 15 every year.

YesYes, $125,000 or less -> "Exempt for 2026 and later. File a rendition with the certification by April 15 once to elect out of future renditions.

Question 4Do you have employees (paid $1,500 or more in wages in a quarter, or had at least one employee in 20 different weeks of a year)?

YesYes -> "Texas unemployment tax: register with TWC, file quarterly reports by the last day of the month after each quarter.

NoNo -> "No TWC account needed yet.

End (every path)Federal income tax, self-employment tax and quarterly estimates still apply.

Most owner-run service businesses in DFW land on at least two of these. A landscaping LLC in Prosper with a crew, for example, touches all four.

03

Texas Franchise Tax

The Texas franchise tax is a privilege tax on entities formed in Texas or doing business here. Think of it as the state's charge for the liability protection your LLC or corporation gives you.

Who owes the Texas franchise tax?

According to the Texas Comptroller's taxable entities FAQ ↗, a sole proprietorship that isn't legally organized to limit its liability is not a taxable entity.

Here's the part that trips people up. A single-member LLC is a taxable entity in Texas, even though the IRS treats it as a sole proprietor on your federal return. Texas looks at how the business was legally formed, not how it files federally.

So if you formed an LLC for your Frisco consulting practice or your Garland plumbing company, you're in the franchise tax system.

The no-tax-due threshold for 2026 and 2027

Most small businesses don't actually pay franchise tax. They file and owe nothing.

According to the Texas Comptroller's franchise tax page ↗, the no-tax-due threshold for the 2026 and 2027 report years is $2,650,000 in annualized total revenue. At or below that amount, you owe no franchise tax.

Above the threshold, the tax applies to your margin (roughly, revenue minus certain allowed deductions). For 2026 and 2027 reports, the Comptroller lists these rates:

0.375%for retail or wholesale businesses

0.75%for everyone else

0.331%under the EZ computation, available to entities with total revenue up to $20 million

The May 15 due date

The annual franchise tax report is due May 15. If May 15 lands on a weekend or holiday, the due date moves to the next business day, per the Texas Comptroller.

The Public Information Report (don't skip it)

This is the filing most small owners miss.

The Comptroller discontinued the separate No Tax Due Report starting with the 2024 report year. That didn't remove the filing. According to the Comptroller's no tax due reporting update ↗, entities at or below the threshold must still file a Public Information Report or an Ownership Information Report each year.

The Comptroller's PIR and OIR filing requirements ↗ explain which one you file:

Public Information Report (Form 05-102)corporations, LLCs, limited partnerships, professional associations and financial institutions

Ownership Information Report (Form 05-167)other taxable entities

Both are due on the same date as the franchise tax report.

Example scenario: say a McKinney bookkeeping LLC brings in $300,000 a year. It's well under $2.65 million, so it owes no franchise tax. It still files a Public Information Report by May 15 listing its members and managers. That's the whole filing, and it takes a few minutes once you know it's required.

What happens if you don't file

Skipping the franchise filings has real consequences. The Comptroller lists these:

The bigger risk is forfeiture. According to the Comptroller's PIR and OIR page, an entity that fails to file a completed PIR or OIR may forfeit its right to transact business in Texas. Forfeiture can block the business from suing or defending itself in a Texas court, and officers, managers or members can become personally liable for certain business debts.

That last part matters. The liability protection you formed an LLC to get can slip away over a filing you didn't know existed.

04

Texas Sales and Use Tax

Sales tax is where Texas surprises service businesses most. Plenty of owners assume sales tax is for retail stores. In Texas, a long list of services is taxable too.

The state rate plus local rates

According to the Texas Comptroller's sales and use tax page ↗, the state rate is 6.25%. Cities, counties, transit authorities and special districts can add up to 2% more, for a combined maximum of 8.25%.

The rate you charge depends on where the sale happens, so it can differ between a job in Allen and a job in Dallas. Check the Comptroller's local rate tools before you set up invoicing.

Use tax is the other half. If you buy something taxable without paying Texas sales tax (an out-of-state online order for business equipment, for example), you generally owe use tax on it yourself.

Who needs a sales tax permit?

According to the Comptroller's sales tax permit FAQ ↗, you need a Texas sales and use tax permit if you're engaged in business in Texas and you sell or lease taxable goods or sell taxable services. Individuals, partnerships, corporations and other organizations all fall under this rule.

Good news: the Comptroller says there's no fee for the permit, though you may be required to post a security bond. You apply through the Comptroller's online tax registration.

Which services are taxable in Texas?

Texas law lists 16 categories of taxable services. The Comptroller's Taxable Services guide (Publication 96-259) ↗ covers each one. The categories that come up most for DFW small businesses include:

Many common services aren't on the list. If your service isn't one of the 16 categories, it's generally not subject to sales tax. Professional work like ours is a good example. Publication 96-259 says accountants preparing financial statements or tax returns aren't providing taxable data processing, even though the work is done on a computer.

Taxable or not? A quick table for DFW service businesses

Here's how the rules land for service businesses we see across North Texas. Every row comes from a Comptroller publication, linked below the table.

ComparisonTexas Sales Tax: Taxable or Not? (Common DFW Service Businesses)

Service	Taxable in Texas?	Good to know
Landscaping and lawn care (residential or commercial)	✓Taxable	A self-employed person with no employees who does the work personally and has $5,000 or less in these receipts over the last four quarters doesn't collect tax.
Structural pest control	✓Taxable	Tax is due even when no pests are found.
Janitorial, maid and pool cleaning services	✓Taxable	Covers homes, offices, warehouses and restaurants. A housekeeper who is an employee of the household isn't taxed.
Commercial (nonresidential) repair and remodeling	✓Taxable	The total charge is taxable.
Residential repair and remodeling labor	✕Not taxable	Materials are handled differently under lump-sum and separated contracts.
New construction labor	✕Not taxable	Incorporated materials are taxable.
Motor vehicle repair labor	✕Not taxable	Parts are taxable. Remodeling a vehicle is taxable.
Data processing and information services	✓Taxable	20% of the charge is exempt.
Security services	✓Taxable	Listed as a taxable service category.
Accounting and tax return preparation	✕Not taxable	✕Not data processing, even when done on a computer.

Source: Texas Comptroller Publications 94-111, 94-112, 94-113, 94-114, 94-116 and 96-259. Rules have exceptions. Confirm your situation with the Comptroller or a CPA.

Sources for the table:

Moji's take

“Contractors get caught by the line between residential and commercial. Remodeling a home kitchen and remodeling a dental office look like the same job. For sales tax, they're not. If you do both, your invoicing has to know the difference.”

That's exactly the kind of detail we cover in our guide to job costing for contractors in DFW, because the way you set up jobs and invoices decides whether sales tax gets charged correctly.

Filing frequency and due dates

You don't pick how often you file. The Comptroller assigns monthly, quarterly or yearly filing and tells you by letter.

According to the Texas Comptroller, returns are due on the 20th:

Monthly filersthe 20th of the following month

Quarterly filersApril 20, July 20, October 20 and January 20

Yearly filersJanuary 20 for the prior year

If the 20th falls on a weekend or legal holiday, the due date moves to the next working day.

Two things owners often don't realize. First, you have to file a return even when you had no taxable sales, according to the Comptroller's permit FAQ. Second, filing on time pays you a little. The Comptroller allows a 0.5% discount on tax that's timely reported and paid.

Late filing costs a $50 penalty per late report, plus 5% of the tax if paid 1 to 30 days late and 10% after that.

05

Business Personal Property Tax and Renditions

If you own a building, you already know about property tax on real estate. Fewer owners know that Texas also taxes business personal property, meaning the equipment, furniture, computers, tools and inventory you use to make money.

What is a rendition?

A rendition is a report you file with your county appraisal district listing your business property and your good-faith estimate of its value as of January 1.

According to the Texas Comptroller's 2026 rendition notice ↗, it covers taxable inventory, furniture and fixtures, machinery, equipment and other property owned or managed on January 1 each year.

The deadline: April 15

Renditions are due April 15. According to the Comptroller's property tax deadlines calendar ↗, the chief appraiser must extend the deadline to May 15 if you ask in writing, and can add another 15 days for good cause.

Missing it is expensive. The Comptroller's page on valuing property ↗ says a late rendition can bring a penalty of 10% of the total taxes on that property for the year. Filing a false report can bring a 50% penalty.

The big change: the $125,000 exemption starting in 2026

Texas changed the rules recently, and it's good news for most small businesses.

In November 2025, Texas voters approved a constitutional amendment for a $125,000 exemption on tangible personal property held or used to produce income, according to the Comptroller's January 2026 Property Tax Today newsletter ↗.

The Dallas Central Appraisal District's HB 9 exemption notice ↗ spells out how it works:

The one-time election for smaller businesses

Here's the part to act on. If your property is worth $125,000 or less, you can elect to stop rendering. But you have to opt in.

According to the same Dallas CAD notice, you make the election by filing a rendition by April 15 that includes a certification that you reasonably believe your property is worth $125,000 or less. The rendition form has a section for this.

The election stays in place until ownership changes, the chief appraiser asks for a rendition, or your property value goes over $125,000.

Example scenario: say a Richardson IT consultant owns laptops, monitors and office furniture worth about $15,000. That's under $125,000, so it's exempt. By filing one rendition with the certification by April 15, the consultant can stop filing renditions in future years until something changes.

Moji's take

“This is one of the best changes Texas has made for small business in years. Just don't assume it happens by itself. If you've been rendering small amounts every spring, file the certification once and take that chore off your list.”

06

Texas Unemployment Tax (TWC)

Who has to register

2026 rates and wage base

Quarterly due dates

If you have employees, you probably owe state unemployment tax to the Texas Workforce Commission. It funds unemployment benefits for workers who lose their jobs.

Who has to register

According to TWC's guide on whether you need an unemployment tax account ↗, most employers become liable when they:

The 20 weeks don't have to be in a row, and part-time work counts. Domestic and farm employers have their own thresholds.

TWC's unemployment tax basics ↗ says employers should register within 10 days of becoming liable, using TWC's free online registration.

2026 rates and wage base

According to TWC's unemployment insurance tax rates page ↗, for 2026:

Your rate moves off the entry level as you build a history with TWC. Fewer unemployment claims against your account generally means a lower rate over time.

Quarterly due dates

TWC's report and payment due dates ↗ are the last day of the month after each quarter ends:

If you run payroll through a provider, these filings are usually part of the service. Our payroll, 1099s and Texas sales tax service runs payroll through Gusto and reconciles every filing back to your books.

07

Federal Taxes That Still Apply

Self-employment tax

Quarterly estimated taxes

No state income tax means your federal taxes carry most of the weight. Here are the two that hit owner-run businesses hardest.

Self-employment tax

If you're a sole proprietor, a single-member LLC owner or a partner, you pay self-employment tax on your net earnings. According to the IRS ↗, the rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. It applies once your net earnings from self-employment reach $400.

The Social Security part stops at an annual wage base that changes every year. Check the current figure in the IRS Schedule SE instructions.

You can deduct the employer-equivalent portion of self-employment tax when figuring your adjusted gross income, according to the same IRS page.

Moji's take

“For a lot of DFW owners, self-employment tax is a bigger bill than income tax. It's also the one people forget to plan for. Some owners ask about S-corp status to manage it, and that's worth a conversation with a tax advisor who handles entity elections.”

Quarterly estimated taxes

The IRS doesn't wait until April. According to the IRS estimated taxes page ↗, sole proprietors, partners and S corporation shareholders generally have to make estimated payments if they expect to owe $1,000 or more.

For the 2026 tax year, the 2026 Form 1040-ES ↗ lists these due dates:

The IRS notes you can skip the January 15, 2027 payment if you file your 2026 return by February 1, 2027 and pay the full balance with it.

We break down how to size these payments, and the federal moves that lower them, in our DFW small business tax strategies guide. If you want someone to run the numbers every quarter, that's what our tax planning service is for.

08

Your County: Collin, Dallas or Denton

Most Texas business taxes are statewide. Property renditions are the exception. You file them with the appraisal district for the county where your property is located, not where you live and not where your customers are.

That matters in DFW, because several of our cities cross county lines.

McKinney, Allen, Frisco and Planoare in Collin County. Frisco and Plano also reach into Denton County.

Garland and Dallasare in Dallas County.

Dentonis in Denton County.

So a business in west Frisco might render with Denton CAD, while one a few miles east renders with Collin CAD. Your appraisal notice or a search on your county's appraisal district site will confirm which one holds your account.

Side by sideCollin vs. Dallas vs. Denton County: Where to File Your Property Rendition

Collin County

Appraisal districtCollin Central Appraisal District

Websitecollincad.org ↗

Cities we serveMcKinney, Allen, Frisco and Plano (Frisco and Plano also reach into Denton County)

Dallas County

Appraisal districtDallas Central Appraisal District

Websitedallascad.org ↗

Cities we serveDallas, Garland

Denton County

Appraisal districtDenton Central Appraisal District

Websitedentoncad.com ↗

Cities we serveDenton, plus parts of Frisco and Plano

Frisco and Plano straddle Collin and Denton counties. File where your property is located. Rendition deadline: April 15. Extension to May 15 on written request. Property over $125,000 at a location: render every year. $125,000 or less: exempt, and you can elect out of future renditions by filing the certification once.

Here's where to start in each county:

Collin Countythe Collin Central Appraisal District explains its rendition rules and notes that it mails rendition forms as a courtesy. You still have to file on time even if one never arrives.

Dallas Countythe Dallas Central Appraisal District posts its business personal property rendition forms, including the 2026 Confidential Personal Property Return.

Denton Countythe Denton Central Appraisal District is where you file for property located in Denton and the Denton County parts of Frisco and Plano.

Whether you run a crew out of Garland, a studio in Frisco, an office in Plano or a shop off the square in McKinney, the rules are the same. Only the appraisal district changes. Owners in Denton and Dallas follow the same April 15 deadline with their own districts.

09

The Texas Business Tax Calendar

Here's every key date in one place. Pin it near your desk or add it to your calendar app.

CalendarTexas Small Business Tax Calendar

Every month, the 20thMonthlysales tax return due (Texas Comptroller)

January 15, 2027January 15, 2027Final 2026 federal estimated tax payment (IRS)

January 20Quarterlysales tax return for October to December, and yearly sales tax return (Texas Comptroller)

January 31January 31TWC quarterly wage report for October to December

April 15April 15Business personal property rendition due, or the one-time certification if your property is $125,000 or less (county appraisal district)

April 20Quarterlysales tax return for January to March

April 30April 30TWC quarterly wage report for January to March

May 15May 15Texas franchise tax report and Public Information Report or Ownership Information Report (Texas Comptroller). Also the extended rendition deadline if you asked in writing.

July 20Quarterlysales tax return for April to June

July 31July 31TWC quarterly wage report for April to June

October 20Quarterlysales tax return for July to September

October 31October 31TWC quarterly wage report for July to September

Federal estimated tax payments for 2027Federal estimated tax payments for 2027check the dates on the 2027 Form 1040-ES at IRS.gov

Due dates that fall on a weekend or holiday generally move to the next business day. Confirm each year with the agency.

Spring is the crunch. Between April 15 and May 15, many DFW businesses face a rendition, a quarterly sales tax return, a TWC report, a federal estimate and the franchise filings, all inside about 30 days.

10

What to Do This Year

Here's the practical list. Work through it once and you'll know exactly where you stand.

ChecklistYour Texas Small Business Tax Checklist

Confirm your entity type. If you're an LLC, corporation or partnership, add May 15 to your calendar for the franchise tax report or PIR.

Check your franchise tax account status with the Comptroller. Look for any missed PIRs from past years.

Compare your annualized total revenue to the $2.65 million no-tax-due threshold (2026 and 2027 reports).

Check your services against the Comptroller's taxable services list. If any are taxable, get a free sales tax permit.

If you already have a permit, confirm your filing frequency and that you've filed every period, even zero periods.

Separate residential and commercial work in your invoicing if you're a contractor.

List your business equipment, furniture and inventory. Is it over or under $125,000 per location?

If it's $125,000 or less, file the rendition with the certification by April 15 to elect out of future renditions.

If you have employees, confirm your TWC account is open and quarterly reports are current.

Set up federal quarterly estimates based on this year's numbers, not last year's guess.

Print this checklist

Start with clean books

Every item on that list depends on knowing your numbers. Your franchise tax threshold is based on revenue. Your rendition is based on your fixed asset list. Your sales tax is based on what you invoiced and where.

If your books are behind, the filings will be guesses. Our guide to catching up on bookkeeping walks through how to get current, and our bookkeeping cleanup and catch-up service does it for you.

Keep a fixed asset list

Most small businesses don't track equipment once it's bought. Start a simple list now: what you own, when you bought it, what you paid and where it's kept. It makes your rendition easy and your depreciation on the federal return accurate.

Put the dates where you'll see them

Missed Texas filings rarely come from owners ignoring the rules. They come from owners who didn't know a filing existed. The calendar above fixes that.

Decide who's handling what

Texas taxes touch several agencies, and most owners don't want to track all of them. A good accountant should know every filing your business owes. If you're deciding who to hire, our guide on the difference between a bookkeeper, a CPA and a tax preparer explains who handles which pieces.

At Mashbooks, our monthly bookkeeping and accounting keeps the numbers clean, and our business and personal tax returns service handles the federal side. If you're setting up QuickBooks for the first time, our QuickBooks setup and training can build your sales tax and asset tracking in from day one.

Moji's take

“The owners who sleep well in April aren't the ones with the lowest taxes. They're the ones who know every filing coming and already have the numbers ready. That's what we build for our clients.”

11

Get Your Texas Filings Sorted Before Spring

We wrote this guide because we see the same gaps over and over: a missed Public Information Report, a contractor charging sales tax on the wrong jobs, a rendition filed for $10,000 of equipment that's now exempt. None of these are hard to fix once someone spots them.

That's what our free review is for. We'll look at your books and last year's return and send you a one-page summary of what's working, what's broken and what to fix first. No pressure, no sales pitch on the call.

We work with owners across McKinney, Allen, Prosper, Richardson and the rest of our DFW service areas. For more guides like this one, browse our Texas business taxes articles and our tax planning articles.

Book Your Free Books & Tax Review or call (469) 712-4199.

This article is general information, not tax or legal advice for your situation. Talk with a CPA before acting on it.

Moji Shobowale, CPACPA · Texas & Illinois · QuickBooks Online ProAdvisorMoji started her career as an auditor and now helps DFW business owners keep clean books and plan their taxes all year.