Changes to Franchise Tax Nexus Coming Soon!
The Comptroller’s office is proposing amendments to Rule 3.586 (Margin: Nexus) to implement the decision in Wayfair for franchise tax reports due on or after Jan. 1, 2020. We are proposing an economic nexus threshold of $500,000 gross receipts in Texas. Proposed Rule 3.586 will be available in the Sept. 27 edition of the Texas Register for review and comment from the public and our stakeholders.
The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. For general information, see the Franchise Tax Overview.
Update a Franchise Tax Account
File and Pay Franchise Tax
Tax Rates, Thresholds and Deduction Limits
Franchise tax rates, thresholds and deduction limits vary by report year. Use the rate that corresponds to the year for which you are filing.
Annual Franchise Tax Reports
The annual franchise tax report is due May 15. If May 15 falls on a weekend or holiday, the due date will be the next business day.
Final Franchise Tax Reports
Before getting a Certificate of Account Status to terminate, convert, merge or withdraw registration with the Texas Secretary of State:
- A Texas entity, terminating, converting or merging, must file its final tax report and pay any amount due in the year it plans to terminate, convert or merge.
- An out-of-state entity, ending its nexus in Texas, must file its final report and pay any amount due within 60 days of ceasing to have nexus.
Penalties and Interest
- A $50 penalty is assessed on each report filed after the due date.
- If tax is paid 1-30 days after the due date, a 5 percent penalty is assessed.
- If tax is paid over 30 days after the due date, a 10 percent penalty is assessed.