New $2.47 M “No-Tax-Due”
Beginning with report years due on or after January 1, 2024, Texas more than doubled its “no-tax-due” threshold—raising it from $1.23 million to $2.47 million. This change, enacted by Senate Bill 3, relieves smaller businesses from owing any franchise tax, but it does not eliminate their filing obligations entirely. In this blog, we’ll explain who still must file, which forms to use, and how to stay compliant by the May 15, 2025 deadline.
Applicable Tax Authority & Code References
- Senate Bill 3 (88th Leg., 2nd Called Sess.) raised the no-tax-due threshold to $2.47 million for reports due on or after Jan. 1, 2024.
- Tex. Tax Code § 171.002(d) provides that no franchise tax is due if annualized total revenue is ≤ $2.47 million.
- Form 05-163 discontinued: The No Tax Due Information Report (Form 05-163) is no longer used for report years 2024 and beyond.
- Passive entities: Defined in Tex. Tax Code § 171.0003; such entities owe no tax and need not file PIR/OIR.
Who Still Files—and What Forms?
| Situation | Forms Required | Notes |
|---|---|---|
| Revenue ≤ $2.47 M | • Public Information Report (PIR): Form 05-102• Ownership Information Report (OIR): Form 05-167 | Must file by May 15, but owe no tax. |
| Combined-group members | Same as above | Every member with Texas nexus files PIR/OIR, regardless of group total. |
| Exempt entities | None | Purely passive entities (Tex. Tax Code § 171.0003); qualifying REITs (Tex. Tax Code § 171.0002(c)(4)); new veteran-owned businesses for first five years. |
Deadline Reminder: Annual franchise tax reports, PIR/OIR filings, payments (if any), and extension requests are due May 15, 2025 (or next business day).
Detailed Example
GreenLeaf LLC is a Texas consulting partnership with annualized total revenue of $1,800,000 for its 2024 privilege period.
- Compare revenue to threshold: $1.8 M ≤ $2.47 M ⇒ no tax due.
- Complete Form 05-102 (PIR) with entity and ownership details.
- Complete Form 05-167 (OIR) if required by ownership structure.
- File both forms electronically via WebFile (or mail certified PDF) by May 15, 2025.
- Retain confirmation for your records.
Step-by-Step Compliance Guide
- Calculate Annualized Total Revenue
- Use federal return (Forms 1120, 1120-S, or 1065) to determine gross receipts.
- Determine Filing Category
- If ≤ $2.47 M, prepare PIR/OIR; if > $2.47 M, prepare full franchise tax report (Form 05-158).
- Identify Exemptions
- Confirm passive-entity status (Tex. Tax Code § 171.0003).
- Verify REIT status (Tex. Tax Code § 171.0002(c)(4)).
- Check for new veteran-owned business exemption (initial five-year period).
- Complete Required Forms
- PIR: Form 05-102
- OIR: Form 05-167
- File & Retain Proof
- Electronically via WebFile is fastest.
- If mailing, use certified PDF/certified mail and keep receipts.
- Monitor Deadlines & Extensions
- File by May 15; file Form 05-164 by May 15 to extend to November 15.
- Understand Penalties & Interest
- $50 late-filing fee per report; 5% of tax due if paid 1–30 days late; 10% if over 30 days late; interest begins accruing 61 days after due date.
Conclusion
While businesses with annualized revenue at or below $2.47 million owe no Texas franchise tax, they must still file a Public Information Report and, if applicable, an Ownership Information Report by May 15, 2025. Carefully determining your filing category and completing the proper forms ensures compliance and avoids penalties.
Schedule a Meeting to confirm whether your business qualifies for the no-tax-due threshold and to ensure all filings are accurate.
About Our CPA
Anshul Goyal, CPA, EA, FCA, is a licensed Certified Public Accountant in the United States and admitted to practice before the IRS as an Enrolled Agent. He represents clients in tax litigation, specializes in cross-border tax compliance for U.S. businesses and Indian nationals residing in the U.S., and delivers tailored tax planning strategies.
Disclaimer
This blog is provided for general informational purposes only and does not constitute tax, legal, or accounting advice. You should consult a qualified professional regarding your specific situation before taking any action. Anshul Goyal, CPA, EA, FCA, and Kewal Krishan & Co. disclaim any liability for actions taken based on this information.
FAQs
1. What is the 2025 no-tax-due threshold?
Annualized total revenue of $2.47 million or less.
2. Do I owe any tax if I’m under the threshold?
No—but you must file PIR (Form 05-102) and, if required, OIR (Form 05-167) by May 15.
3. Is Form 05-163 still required?
No. The No Tax Due Report (Form 05-163) is discontinued for 2024 and beyond.
4. How do combined groups handle filings?
Each member with Texas nexus files PIR/OIR, even if the combined group’s revenue is ≤ $2.47 M.
5. What penalties apply for late filings/payments?
$50 late-filing fee per report; 5% penalty if paid 1–30 days late; 10% if over 30 days late; interest begins accruing 61 days after due date.