tx-franchise-tax

Texas franchise tax calculates your taxable margin by comparing four methods: 70% of revenue, revenue minus COGS, revenue minus compensation, and revenue minus $1M. It applies the appropriate rate to the lowest margin result and factors in applicable credits.

The Texas franchise tax EZ computation is a simplified calculation option available if your total revenue is $20 million or less. It applies official Comptroller thresholds to streamline margin determination and tax filing.

Your business owes no Texas franchise tax when total revenue falls below the official no-tax-due threshold set by the Texas Comptroller. Providing your total revenue allows the calculation to automatically determine if you meet this filing exemption.

To apply R&D and historic structure credits to your Texas franchise tax, first determine your lowest taxable margin across the four calculation methods, then subtract the applicable credit amounts from the computed tax liability to reduce your final owed tax.

Computing Texas margin tax for a retail or wholesale entity requires inputs including total revenue, COGS, compensation, entity type, and whether you use the EZ computation. These inputs determine the applicable rate and lowest taxable margin.

Yes, out-of-state businesses doing business in Texas must file franchise tax if they meet state nexus requirements. The calculation applies official Comptroller thresholds to determine your filing requirement and tax liability.