E-Z Computation (0.331 %) for SaaS Startups Under $20 M Revenue

E-Z Computation

For Texas entities with annualized total revenue of $20 million or less, the E-Z Computation method offers a simplified franchise tax calculation at a flat 0.331 % rate. This option eliminates complex deductions (COGS, compensation, 70% of revenue, or $1 million) in exchange for a straightforward multiplier—ideal for SaaS founders looking to minimize compliance burden and locking in predictable tax liabilities.

Applicable Tax Authority & Code References

• E-Z Computation Election & Rate: Tex. Tax Code § 171.1016(a)–(b) allows entities with total revenue ≤ $20 million to elect E-Z Computation and compute tax by apportioning total revenue to Texas (per § 171.106) and multiplying by 0.331 %.
• No Additional Deductions: Subsection (c) prohibits any credits or deductions when electing this method.
• Total Revenue Definition: Determined under Tex. Tax Code § 171.1011.
• Administrative Rule: 34 Tex. Admin. Code § 3.584(C)(B) confirms the $20 million revenue cap and 0.331 % rate for reports due ≥ Jan 1, 2016.

Forms Required

• E-Z Computation Report: Form 05-169 
• Public Information Report: Form 05-102 
• Ownership Information Report: Form 05-167 (if applicable) 
• Payment Voucher: Form 05-170 (if tax owed) 
• Extension Request: Form 05-164 (to extend to Nov 15) 

Deadline: All filings, payments, and extension requests must be filed or postmarked by May 15, 2025 (or the next business day).

Detailed Example

SaaSify Inc. has total 2024 revenue of $12 million and a Texas receipts factor of 75%.

1. Determine Total Revenue: $12 000 000
2. Apportioned Revenue: $12 000 000 × 0.75 = $9 000 000
3. Tax Calculation: $9 000 000 × 0.00331 = $29 790

SaaSify Inc. will file Form 05-169, attach Form 05-170 for a $29,790 payment, and submit Form 05-102 (and 05-167, if needed) by May 15.

Step-by-Step Compliance Guide

1. Confirm Eligibility
   • Verify annualized total revenue ≤ $20 million under § 171.1016(a).
2. Gather Revenue Data
   • Use federal returns (Forms 1120, 1120-S, or 1065) to establish total revenue per § 171.1011.
3. Compute Apportioned Revenue
   • Apply Texas single-factor receipts apportionment under § 171.106.
4. Calculate Tax
   • Multiply apportioned revenue by 0.331 % (0.00331).
5. Complete Forms
   • Fill out Form 05-169; complete Form 05-102 and 05-167 if required.
6. File & Pay
   • Submit reports via WebFile or mail PDFs; include Form 05-170 if any tax is due.
7. Consider Extension
   • If more time is needed, file Form 05-164 by May 15 to extend to Nov 15.
8. Retain Confirmation
   • Save WebFile acknowledgments or certified mail receipts for your records.

Conclusion

For SaaS startups under $20 million in revenue, the E-Z Computation method streamlines your Texas franchise tax into a single 0.331 % multiplier on apportioned revenue. Elect this method on Form 05-169, file by May 15, 2025, and steer clear of deductions and complexity—saving you time and reducing audit risk.

Schedule a Meeting to confirm your eligibility for E-Z Computation and ensure flawless filing.

About Our CPA

Anshul Goyal, CPA, EA, FCA, is a licensed Certified Public Accountant in the United States and an IRS-admitted Enrolled Agent. He represents clients in tax litigation, specializes in cross-border compliance for U.S. businesses and Indian nationals, and delivers focused, efficiency-driven tax strategies.

Disclaimer

This blog is for general informational purposes only and does not constitute tax, legal, or accounting advice. Consult a qualified professional regarding your specific circumstances. Anshul Goyal, CPA, EA, FCA, and Kewal Krishan & Co. disclaim any liability for actions taken based on this content.

FAQs

1. Who qualifies for the E-Z Computation method?
Entities with annualized total revenue ≤ $20 million, electing on their franchise tax report.

2. What forms do I file for E-Z Computation?
Form 05-169, along with Form 05-102 (PIR), Form 05-167 (OIR, if needed), and Form 05-170 (payment).

3. Can I claim COGS or compensation deductions?
No. E-Z Computation disallows all deductions not specifically authorized by Tex. Tax Code § 171.1016(c).

4. How is tax calculated under E-Z Computation?
Apportion total revenue under § 171.106, then multiply by 0.331 % per § 171.1016(b).

5. What is the filing deadline?
May 15, 2025, with an option to extend to Nov 15 by timely filing Form 05-164.