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Texas Comptroller · Franchise Tax
Most franchise tax disasters start with a report nobody filed.
Thousands of Texas companies owe no franchise tax at all and still lose their good standing, because owing nothing does not excuse the filing. The consequences of forfeiture land on the people running the company.
Texas franchise tax reports are due May 15 each year. For 2026 and 2027 reports, an entity with annualized total revenue at or below $2,650,000 owes no tax, but must still file a Public Information Report or Ownership Information Report. If reports or payments are missed, the Comptroller can forfeit the entity's right to transact business in Texas, and the Secretary of State can forfeit its charter. While privileges are forfeited, directors and officers are personally liable for company debts created after the missed due date.
Who owes and what gets filed
The franchise tax applies to corporations, LLCs, partnerships with limited liability, and most other entities that do business in Texas. Sole proprietorships and general partnerships owned entirely by natural persons are outside it.
- No tax due threshold: $2,650,000 of annualized total revenue for 2026 and 2027 reports ($2,470,000 for 2024 and 2025).
- Below the threshold: no tax report is required, but the entity must file its Public Information Report or Ownership Information Report.
- Rates: 0.375 percent of margin for retail and wholesale businesses and 0.75 percent for others, or an EZ computation of 0.331 percent of revenue for entities with $20 million or less in total revenue.
- Due date: May 15, moved to the next business day when it falls on a weekend or holiday.
What forfeiture does
After notice, the Comptroller can forfeit an entity's right to transact business. The entity then cannot sue or defend itself in a Texas court, and the Secretary of State can later forfeit its charter or registration. Banks, buyers, landlords, and title companies check the Comptroller's public status search, so a forfeited status tends to surface at the worst time: a closing, a loan renewal, or a lawsuit.
That exposure reaches ordinary business debts, not only taxes. Creditors' lawyers look for forfeiture periods for exactly this reason.
Getting back into good standing
Reinstatement generally means filing every delinquent report, paying any tax, penalty, and interest, obtaining a tax clearance letter from the Comptroller, and filing for reinstatement with the Secretary of State when the charter was forfeited. Revival restores the entity's privileges. Whether it cures personal liability for debts incurred during the gap is a separate legal question that depends on the facts.
Franchise tax audits
For companies above the threshold, audits focus on how margin was computed: what counts as total revenue, whether cost of goods sold or compensation was properly deducted, whether the company qualifies for the retail and wholesale rate, how revenue was apportioned to Texas, and whether related entities should have filed a combined report. Assessments are contested through the same redetermination process as sales tax, with the same 60-day deadline.
What happens if you ignore it
The notices escalate from a delinquency letter to forfeiture of the right to transact business, then to charter forfeiture. Estimated assessments, liens, and bank freezes can follow. Meanwhile every contract the company signs adds to the officers' potential personal exposure.
When a lawyer matters
When forfeiture has already happened and the company has debts, a pending lawsuit, or a sale or financing in progress. The order and timing of the cure, and what is said to creditors in the meantime, affect the officers personally. It also matters when an audit turns on a legal question such as combined reporting, apportionment, or which deduction the statute allows.
Official sources
The rules described on this page come from these primary sources. Check them, or the notice you received, for current figures and dates.
When to call
Look into it now if:
- The Comptroller's website shows your company's right to transact business as forfeited.
- You received a notice of pending forfeiture or a delinquency letter.
- Your revenue was under the threshold and you assumed nothing needed to be filed.
- A bank, buyer, or title company flagged your entity's status.
- The company was sued, or needs to sue, while its privileges are forfeited.
- You received a franchise tax audit notice or assessment.
Common questions
Direct answers.
What is the Texas franchise tax no tax due threshold?
For 2026 and 2027 reports it is $2,650,000 in annualized total revenue. For 2024 and 2025 reports it was $2,470,000. Entities at or below the threshold owe no franchise tax.
If my business owes no franchise tax, do I still have to file?
Yes. Beginning with 2024 reports, entities under the threshold no longer file a No Tax Due Report, but they must still file a Public Information Report or an Ownership Information Report each year.
When is the Texas franchise tax report due?
May 15 each year. If May 15 falls on a weekend or holiday, the due date is the next business day.
What does forfeiture of the right to transact business mean?
The entity loses the right to sue or defend in Texas courts, and its directors and officers become personally liable for debts the entity incurs after the missed due date and before its privileges are revived. The Secretary of State may later forfeit the charter or registration.
Can officers be personally liable for a company's debts because of franchise tax?
Yes. Under Texas Tax Code section 171.255, when corporate privileges are forfeited, each director and officer is liable for company debts created in Texas after the report or tax was due and before revival, subject to narrow defenses.
How do I reinstate a forfeited Texas entity?
File all delinquent franchise tax reports, pay any tax, penalty, and interest, request a tax clearance letter from the Comptroller, and file the reinstatement with the Secretary of State if the charter or registration was forfeited.
Related problems
State tax problems tend to travel together.
Personal Liability for Business Taxes
Sales tax you collected belongs to the state. If the business does not pay it over, Texas can come after the person who controlled the money.
Read more →Comptroller Liens, Freezes & Levies
The Comptroller can freeze a bank account for 60 days and levy it at any point in that window, without going to court. The account freeze is usually the first time an owner takes the debt seriously.
Read more →Texas Sales Tax Audit
The Comptroller audits four years at a time, tests a sample, and projects the error rate across everything. The sample and the records you produce decide the number.
Read more →Redetermination Hearings & SOAH
Sixty days to contest a Comptroller assessment in writing. The case goes to a Comptroller attorney first, then to an administrative law judge if it does not settle.
Read more →Next step
Check your entity's status. Then call.
Tell us what the Comptroller's status search shows and what the company has going on right now.