What Is the No Tax Due Threshold for Texas in 2025?

In Texas, businesses are subject to the franchise tax, which is a tax on revenue rather than profits. However, not all businesses are required to pay this tax. The No Tax Due Threshold determines which businesses are exempt from franchise tax payments but still need to file a report.

No Tax Due Threshold for 2025

For the 2025 tax year, businesses with total annual revenue below $1.23 million are not required to pay franchise tax. However, they must still file a No Tax Due Report with the Texas Comptroller of Public Accounts to confirm their exemption.

This threshold applies to most entities, including corporations, LLCs, and partnerships, except for sole proprietorships, which are generally not subject to franchise tax.

Who Must File a No Tax Due Report?

Even if a business falls below the $1.23 million revenue threshold, it is still required to submit a No Tax Due Report. Failing to file this report can result in penalties and may affect the business’s good standing with the state.

Businesses that qualify for the No Tax Due status must also meet one of the following conditions:

  • Total annual revenue is below $1.23 million.

  • The entity is a passive entity as defined by Texas tax law.

  • The business is a real estate investment trust (REIT) that qualifies for an exemption.

How to File a No Tax Due Report

Filing the No Tax Due Report is a straightforward process. Business owners can submit the report online through the Texas Comptroller's website or by mailing a paper form. The deadline to file the report typically aligns with the annual franchise tax report due date, which is May 15 of each year.

Why Filing Matters

Even if no tax is due, failing to file the required report can lead to state-imposed penalties, including fines or the forfeiture of the business’s right to operate in Texas. Keeping up with state filing requirements ensures compliance and maintains the company’s legal status.

Conclusion

In 2025, businesses in Texas with annual revenue under $1.23 million are exempt from paying franchise tax but must still file a No Tax Due Report. Business owners should ensure timely filing to avoid penalties and maintain good standing with the state.

George Dimov