Texas Franchise Tax Long Form Revenue Threshold
Question: What is the minimum business gross income that triggers the Texas franchise tax long form to be filed?
Quick answer: There's no "minimum gross income" that forces the long form specifically — the long form kicks in once your annualized total revenue exceeds $20 million (for report years 2024–2027). Below that, businesses can choose the long form if it produces a lower tax than the EZ computation, but they're not required to.
Explanation
Texas franchise tax has three tiers based on annualized total revenue:
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No tax due (information report only): Report years 2026–2027 use a $2,650,000 threshold; report years 2024–2025 use $2,470,000. At or below this, the entity files only a Public Information Report (corporations/LLCs) or Ownership Information Report (other entities) — no tax report and no tax.
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EZ Computation (optional, simpler): available when annualized total revenue is $20 million or less. Tax = 0.331% of Texas-apportioned total revenue. No cost-of-goods-sold or compensation deduction is allowed.
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Long form: required above $20 million, and available by choice below it when margin deductions give a better result. On the long form, taxable margin is the least of: 70% of total revenue; total revenue minus cost of goods sold; total revenue minus compensation (per-person wage cap $480,000 for 2026–2027 reports; $450,000 for 2024–2025); or total revenue minus $1,000,000 — apportioned to Texas, taxed at 0.375% for retail/wholesale entities, 0.75% for all others.
So to directly answer your question: revenue over the no-tax-due threshold creates a tax report obligation; the long form specifically is triggered by revenue over $20 million, or elected below that when COGS/compensation deductions beat the EZ rate.
What it depends on:
- Your entity type — taxable entities include LLCs, corporations, S corporations, partnerships (except certain general partnerships owned solely by natural persons), and professional associations; sole proprietorships are not subject to the tax.
- Whether COGS or compensation deductions would meaningfully reduce your taxable margin below the EZ Computation's flat revenue base — that's the usual reason a business under $20 million voluntarily files the long form.
- The applicable report year, since thresholds and wage caps differ by year.
Since choosing between EZ and long form involves comparing actual numbers (COGS, payroll, revenue mix), it's worth having a CPA run both calculations for your specific business before you file.
Sources relied upon
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Texas Franchise Tax — Who Files, the No-Tax-Due Threshold, and Which Form
· see it highlighted in context
“- Report years **2026–2027: $2,650,000** annualized total revenue. - Report years **2024–2025: $2,470,000**.”
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Texas Franchise Tax — Who Files, the No-Tax-Due Threshold, and Which Form
· see it highlighted in context
“- Beginning with 2024 reports, the separate "No Tax Due Report" was discontinued: an entity at or below the threshold files **only** a Public Information Report (corporations/LLCs) or Ownership Information Report (other entities) — no tax report and no tax.”
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Texas Franchise Tax — Who Files, the No-Tax-Due Threshold, and Which Form
· see it highlighted in context
“- **EZ Computation** (Tex.”
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Texas Franchise Tax — Who Files, the No-Tax-Due Threshold, and Which Form
· see it highlighted in context
“171.1016): available when annualized total revenue is **$20 million or less**. Tax = 0.331% of Texas-apportioned total revenue. No cost-of-goods-sold or compensation deduction is allowed.”
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Texas Franchise Tax — Who Files, the No-Tax-Due Threshold, and Which Form
· see it highlighted in context
“- **Long form**: required above $20 million, and available by choice below it when margin deductions give a better result.”
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Texas Franchise Tax — Who Files, the No-Tax-Due Threshold, and Which Form
· see it highlighted in context
“Taxable margin is the least of: 70% of total revenue; total revenue minus cost of goods sold; total revenue minus compensation (per-person wage cap $480,000 for 2026–2027 reports; $450,000 for 2024–2025); or total revenue minus $1,000,000 — apportioned to Texas, taxed at **0.375%** for retail/wholesale entities, **0.75%** for all others.”
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Texas Franchise Tax — Who Files, the No-Tax-Due Threshold, and Which Form
· see it highlighted in context
“**Practical answer to "what triggers the long form":** revenue over the no-tax-due threshold creates a tax report obligation; the long form specifically is triggered by revenue over $20 million, or elected below that when COGS/compensation deductions beat the EZ rate.”
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Texas Franchise Tax — Who Files, the No-Tax-Due Threshold, and Which Form
· see it highlighted in context
“Taxable entities include LLCs, corporations, S corporations, partnerships (except certain general partnerships owned solely by natural persons), and professional associations formed in or doing business in Texas. Sole proprietorships are not subject to the tax.”
Quoted passages are extracted verbatim from the source documents by the citation system — they cannot be fabricated by the AI.
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