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Tag: Form 05-158
Texas Franchise Tax Guide: Who Must File And Pay
Introduction The Texas Franchise Tax is one of the state’s primary business taxes and applies to most entities operating in Texas. Even though Texas has no personal or corporate income tax, most business entities are required to file a franchise tax report each year with the Texas Comptroller of Public Accounts. This guide explains who […]
Throwback Rule? Texas Doesn’t Have One—But Here’s the Catch
Introduction Heard of the “throwback rule” and relieved Texas doesn’t have one? You’re partly right. Texas indeed does not impose a throwback rule, unlike California or New York—but there’s a catch for SaaS and digital businesses. In this 2025 guide, we’ll break down what the throwback rule is, why Texas doesn’t adopt it, and where […]
Texas R&D “Double Weighting” Election: When It Helps
Introduction If your Texas startup invests heavily in R&D, there’s a little-known tax strategy that could cut your franchise tax burden significantly in 2025: the “Double Weighting” Election for research expenses. Texas allows certain taxpayers to double-count qualified R&D expenses in the cost-of-goods-sold (COGS) deduction for margin tax purposes. Let’s break down when and how […]
Zero-Emission Equipment Incentive §171.602: Franchise Tax Credit
Introduction In 2025, Texas is rewarding businesses that invest in clean energy and zero-emission technologies with a valuable franchise tax credit under §171.602. If you’re a manufacturer, warehouse, data center, or logistics startup using electric vehicles, battery storage, or clean HVAC systems, this could reduce your state tax bill significantly. Here’s how the Texas zero-emission […]
Bringing a Delaware Corp to Texas: Franchise-Tax Triggers
Bringing a Delaware Corp to Texas When you register a Delaware C-Corporation to do business in Texas as a foreign entity, understanding Texas franchise-tax triggers helps you anticipate annual filing obligations and associated costs. Proper planning avoids unexpected liabilities. Relevant Code & Tax References Texas Tax Code §171.002(4) defines “doing business” in Texas, including maintaining […]
Series LLCs in Texas: One Return or Many?
Series LLCs in Texas Texas Series LLCs allow asset segregation into “series” under a master LLC, simplifying formations and liability shields. A common question is whether each series must file its own Texas franchise-tax report or if the master LLC can file just one consolidated return. Relevant Tax & Code References Texas Tax Code §171.101 […]
Final Franchise-Tax Filings When You Close a Texas LLC
Final Franchise-Tax Filings When closing your Texas LLC, the final franchise-tax filing is critical to avoid penalties, interest, or future liens. This “final report” notifies the Comptroller that your business has ceased operations and ensures no outstanding tax liabilities remain. Relevant Tax Code References Texas Tax Code §171.255(d) requires a final franchise-tax report and payment […]
Annualized Revenue Test: Avoiding a Surprise Texas Tax Bill
Annualized Revenue Test If your Texas franchise-tax reporting period isn’t a full 12 months—because you formed or acquired the business mid-year, changed your fiscal year, or operate on a short tax period—you must annualize your total revenue to determine: Whether you fall under the $2.47 million no-tax-due threshold, and Whether you qualify for the E-Z […]
Late Texas Franchise-Tax Payment? Interest & Penalty Math
Texas Franchise-Tax Payment Missing the May 15 filing or payment deadline for your Texas franchise-tax can trigger multiple charges: a flat late-filing fee, percentage-based penalties, and accruing interest. Understanding how each is calculated—and how quickly they add up—helps you assess the real cost of a late payment and explore possible waiver options. Applicable Tax Authority […]
Total Revenue vs. Cost-of-Goods: Picking the Best Texas Margin Method
Total Revenue vs. Cost-of-Goods Texas franchise tax is based on a business’s margin, but there are four distinct ways to calculate it. Choosing the method that minimizes your taxable margin can save you thousands. In this post, we’ll compare: Total Revenue × 70% Total Revenue − Cost-of-Goods Sold (COGS) Total Revenue − Compensation Total Revenue […]