Tax Policy News

Annual franchise tax reports are due May 15, 2025. Beat the rush to file your franchise tax report or request an extension of time to file – Webfile is available now!

Webfile makes it easy to submit tax reports, make payments, request extensions, file final reports, request tax clearance letters, and view a summary of your transactions. You can find your franchise tax Webfile number (which starts with "XT") on the franchise tax upcoming due date reminder letter we mailed in January.

You can also call 800-442-3453 at any time to get your XT number via our automated system. When you call, be sure to have your 11-digit taxpayer number and identifying information, such as total revenue from a previous report or the amount of the last tax payment you made (cannot be zero).

View our Webfile video tutorials for help getting started. New videos include "Create a User Profile" and "Navigate Webfile and the eSystems Dashboard."

In July 2023, the legislature passed Senate Bill 3, which increased the no tax due threshold to $2.47 million and eliminated reporting requirements for certain entities. In response, the Comptroller's office has changed the way some entities have to report for franchise tax purposes.

No Tax Due Report (Form 05-163) Discontinued

Because taxable entities whose annualized total revenue is less than or equal to the no tax due threshold and qualifying new veteran-owned businesses are no longer required to file a No Tax Due Report, we discontinued the No Tax Due Report for the 2024 report year and beyond. The form is not available for any new reporting periods. Below are the five types of entities that could file a No Tax Due Report prior to 2024 and how each entity will now report (beginning with the 2024 report):

• Taxable entities whose annualized total revenue is less than or equal to the no tax due threshold do not owe any tax and are not required to file a franchise tax report. They are, however, required to file a Public Information Report (PIR) or Ownership Information Report (OIR).
• Qualifying new veteran-owned businesses are not required to file a franchise tax report for the initial five-year period that they qualify as a new veteran-owned business. For new veteran-owned businesses, no PIR or OIR is required during this initial five-year period.
• Qualifying passive entities must file either the long form or the EZ Computation form and darken the circle for passive entities in the taxpayer information section at the top of the form. Other than signing the report, passive entities need not provide information in any other section of the report and no PIR or OIR is required.
• Qualifying real estate investment trusts (REITs) must file either a long form or EZ Computation form and darken the appropriate circle in the taxpayer information section at the top of the form. Other than signing the report, REITs need not provide information in any other section of the report. REITs must file a PIR or OIR.
• Taxable entities with zero Texas gross receipts must file either a long form or EZ Computation form and complete specific line items on the form to compute the entity’s total revenue and report zero on the Texas gross receipts line. Entities with zero Texas gross receipts must file a PIR or OIR.

The long form, EZ Computation form, PIR, OIR and instructions for each tax year are available at Texas Franchise Tax Forms.

Don't confuse BOI Reports with Public Information Reports (PIRs) or Ownership Information Reports (OIRs). Beginning Jan. 1, 2024, the U.S. Department of the Treasury began accepting Beneficial Ownership Information (BOI) reports as required under the Corporate Transparency Act. A BOI report contains information about individuals who own or control companies doing business in the United States. BOI reports should be filed with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) through its online Beneficial Ownership Secure System (BOSS). The reports cannot be filed through the Comptroller’s office or the Texas Secretary of State, and do not serve as a substitute for PIRs or OIRs. For more information on BOI Reports go to the Treasury Department’s website.

Sales tax filers should validate their business location address(es) to ensure local tax is accurately reported. Collecting and paying the correct local tax rate is the taxpayer’s responsibility and inaccurate local tax collection can cost you money. If you have moved and your business location address is no longer correct, visit Move or Add a Business Location and complete the online form.

It is extremely important for all taxpayers to ensure the mailing address we have on file is accurate and up-to-date. Without an accurate mailing address a taxpayer’s mail goes undelivered, and you will miss important information from the Comptroller’s office. Without a correct mailing address an account could slip into a delinquent status and the taxpayer would not be aware. Check your address on our Franchise Tax Account Status Search and/or Sales Taxpayer Search webpages. Visit our Change Mailing Address/Phone Number webpage to update your address online.

For convenient access to taxpayer notices and billings, the Comptroller’s office is developing a platform called “Message Center” within our confidential Webfile system. Many taxpayers have CPAs and consultants that handle their tax filings and have not signed up for Webfile. You must sign up for Webfile and add your taxpayer account using your unique Webfile number to view your account and any important notices that will be in Message Center. Visit our Getting Started with Webfile webpage for information on signing up for Webfile and locating your Webfile number.

The 2024 independently procured insurance tax report (PDF) and supplement (PDF) are due on or before May 15, 2025. To qualify as independently procured insurance, you must obtain the insurance policy directly from a non-admitted insurer, and you must not use the services of an agent or broker in the procurement of coverage. If an agent is involved in the placement of the insurance, the policy may be surplus lines insurance with taxes due to the home state of the insured. If Texas is the home state of the insured and the agent does not hold a surplus lines license in Texas, the transaction may be considered unauthorized insurance.

The Comptroller’s office sent an email reminder in April about the filing deadline.

For any questions regarding insurance tax reports, please contact us at insurance.tax@cpa.texas.gov.

Prepare yourself for emergencies that can cause physical damage like hurricanes, flash floods, and wildfires during the 2025 Emergency Preparation Supplies Sales Tax Holiday. You can purchase certain emergency preparation supplies tax-free during the sales tax holiday. There is no limit on the number of qualifying items you can purchase, and you do not need to give the seller an exemption certificate to claim the exemption.

This year’s holiday begins at 12:01 a.m. on Saturday, April 26, and ends at midnight on Monday, April 28.

Taxpayers can refer to Pub. 98-1017, Emergency Preparation Supplies Sales Tax Holiday for additional information.

Texas taxpayers can save money on tax-free purchases of certain ENERGY STAR^® energy-efficient products and certain water-efficient and water-conserving products during the annual ENERGY STAR^® Sales Tax Holiday and Water-Efficient Products Sales Tax Holiday. The 2025 holidays begin at 12:01 a.m. on Saturday, May 24, and end at midnight on Monday, May 26. There is no limit on the number of qualifying items you can buy, and you do not need to give the seller an exemption certificate to buy items tax free.

Taxpayers can refer to Pub. 96-1331, ENERGY STAR^® Sales Tax Holiday and Pub. 98-1018, Water-Efficient Products Sales Tax Holiday for additional information.

The Comptroller’s office will mail invoices to insurers by the end of May for the Volunteer Fire Department Assistance Fund Assessment, and payment is due Aug. 1, 2025. This assessment applies to property and casualty insurers writing homeowners insurance, fire insurance, farm and ranch owners’ insurance, private passenger auto physical damage insurance, commercial auto physical damage insurance and the non-liability portion of commercial multi-peril insurance.

Sales and Use Tax

Rule 3.330 – Data Processing Services

Publication date – March 28, 2025
Effective date – April 2, 2025

Summary: The Comptroller’s office adopted amendments to Rule 3.330 concerning data processing services. The amendments implement Senate Bill 153, 87th Legislature, 2021, which excluded certain payment processing services from the definition of data processing. The adopted rule adds definitions and lists services that are specifically excluded from data processing under Tax Code Section 151.0035. It also lists services that are excluded from data processing services under the Comptroller’s exclusive jurisdiction to interpret taxable services as provided in Tax Code Section 151.0101. Additionally, the changes more accurately describe unrelated services as nontaxable related services and remove references to a separate, identifiable segment of a business in relation to the multistate benefit exemption.

To see the latest items added to the STAR System, use the New Documents link on the STAR home page in the blue menu bar.

The Monthly Updates Search Form defaults to the current month and “All Taxes.” Use the pull-down menu to choose a different month or a particular tax. Selecting “All Taxes” brings up the documents organized by tax type.

STAR Accession No. 202501013L

Tax Policy issued a private letter ruling related to whether the provision of a frac-sand handling and storage system with operators is a rental of equipment or a service.

The Comptroller’s office determined that operational control of the taxpayer’s system is not transferred to its customers. Therefore, the taxpayer is providing a service and not renting equipment.

The taxpayer’s service is not included within the taxable services listed under Tax Code Section 151.0101. The service is therefore not subject to Texas sales and use tax.

The taxpayer’s service is subject to the oil well servicing tax imposed under Tax Code Chapter 191 if provided as part of a fracking service.

STAR Accession No. 202501016L

A taxpayer who is a manufacturer of carbon steel plates requested a private letter ruling related to the sales tax exemption for quality control equipment used during manufacturing.

Tangible personal property used during the manufacturing of tangible personal property for ultimate sale that is necessary and essential to a quality control process that tests the property being manufactured for sale is exempt from Texas sales and use tax. The Comptroller’s office determined that the taxpayer’s equipment is necessary and essential to the quality control process that tests the steel plates to ensure they meet customer requirements and industry standards. The equipment therefore qualifies for exemption.

STAR Accession No. 202502030L

Tax Policy issued a private letter ruling on whether the costs of road construction and maintenance for logging operations qualify as cost of goods sold (COGS). The taxpayer is a combined group that owns and manages over two million acres of timberland and harvests the timber for wholesale lumber distribution and manufacturing of windows.

The Comptroller’s office determined that the logging roads provide access to the timber for extraction. The logging roads are also attributable to the transportation of goods to taxpayer’s manufacturing facility for processing of the timber and manufacturing of windows. The costs of construction and maintenance of the logging roads therefore qualify as COGS under Section 171.1012(c)(4) related to inbound transportation costs and Section 171.1012(c)(6).

The Taxes webpage has links to:

• All Texas taxes and fees.
• Resources for taxpayers.
• Filing and paying taxes.
• Tax laws and rules.

Our Account Update Tools make it easy for you to:

• Change your address.
• Add a location.
• Close a location.
• Change return/email notifications.

The Comptroller’s office offers video tutorials on filing and paying sales tax through Webfile. View them on our Video Tutorials webpage.

Our office also offers virtual Sales and Use Tax Seminars conducted via Webex Events. New taxpayers are especially encouraged to attend these overviews of tax responsibilities for buyers, sellers, and service providers. For more information, visit the Taxpayer Seminars webpage.

Visit our Tax Training Resources webpage to:

• Find out more about our training resources.
• Register for upcoming webinars.
• View the Podcast and Webinar Archive sections for previous recordings.

The Practitioners’ Corner is a one-stop resource for information about filing and paying taxes, links to tax research sources and searchable databases.

• Tax Due Dates
• Holiday Schedule