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Texas is small-business friendly
A REVIEW OF THE TEXAS ECONOMY
Texas is open for small business
December 2025 | By Moise Julot, Brynne Harder and Morgan Hecht
Texas is open
for small business.
Texas leaders understand the value of small businesses as job creators, service providers, drivers of innovation and pillars of their communities. There is no single definition of small business, but criteria are typically based on number of employees or revenue and usually reflect an entity’s goal. In a new report, Small Business is Big Business in Texas (PDF), the Comptroller of Public Accounts combines the Census Bureau’s Nonemployer data with Statistics of U.S. Businesses data for businesses with fewer than 500 employees. This allows for a complete picture of all small businesses in Texas.
Small businesses employ about 44% of the workforce, 5.1 million people.
99.8 percent of Texas businesses can be categorized as a small business.
3.5
Million
Texas small businesses in 2022.
Small businesses boost Texas economy
Their impact is driven mainly by wages, profits and taxes.
Businesses with fewer than 500 employees generate:
40.1%
of Texas’ private non-farm gross domestic product.
Top five economic sectors
for small business:
1.
Real Estate and Rental and Leasing
2.
Wholesale and Retail Trade
3.
Manufacturing and Mining
4.
Professional and Scientific Services
5.
Construction
Who are small business owners?
Small businesses owned or co-owned by women make up 45 percent of the total, and veterans own or co-own 5.6 percent.
Small businesses keep growing
Between 2017 and 2022, the number of small businesses in Texas grew by 24 percent. Their revenue grew by 54.5 percent and employment by 7.1 percent.
Texas is small-business friendly
by the numbers
0%
Texas has no state income tax.
$2,650,000
Starting Jan. 1, 2026, businesses with annualized total revenue less than or equal to this threshold do not have to pay franchise tax (an increase from $2,470,000).
$125,000
The new amount of business personal property tax exemption, an increase from $2,500. Texas voters passed this amendment during the November 2025 election.
532
Number of academic spinouts in Texas in 2021 — the most in the nation. Universities with incubation and technology transfer/commercialization programs get innovative startups off the ground.
Explore data about Texas small business...
...in the Comptroller’s new report, Small Business is Big Business in Texas (PDF).
Sources: Accenture Research study performed for the Texas Comptroller of Public Accounts, September 2025; Small Business Administration; U.S. Census Bureau; Statistics of U.S. Businesses; Texas Higher Education Coordinating Board