TX
Texas Small Business Tax Guide
What the Texas Comptroller and the IRS say about sales and use tax, permits, taxable services and the franchise tax, for reading only and not as tax advice.
Disclaimer: This page is educational content only. Tax laws change, and your situation may differ. It is not legal, tax, or financial advice. Consult a qualified professional licensed in Texas before making filing or planning decisions.
Tax landscape for small businesses
Each Texas figure on this page is quoted word for word from the Texas Comptroller of Public Accounts (Texas, as retrieved on October 31, 2026), and federal figures are quoted from the IRS beside the date shown on each IRS page.
On sales tax, the Comptroller's sales and use tax page (Texas, as retrieved on October 31, 2026) states: "Texas imposes a 6.25 percent state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services." The Comptroller adds: "Local taxing jurisdictions (cities, counties, special purpose districts and transit authorities) can also impose up to 2 percent sales and use tax for a maximum combined rate of 8.25 percent."
On business taxes, the Comptroller's franchise tax page (Texas, as retrieved on October 31, 2026) states: "The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas." The Comptroller also states "Franchise tax rates, thresholds and deduction limits vary by report year." and "The annual franchise tax report is due May 15."
Worked example (sample figures; Texas rates as retrieved on October 31, 2026): a Texas business sells $1,000.00 of taxable goods. At the quoted 6.25 percent state rate, state tax on that sale works out to $1,000.00 × 6.25% = $62.50, and the invoice total is $1,062.50. Where local taxes bring the rate to the quoted maximum combined 8.25 percent, the tax on the same sale is $1,000.00 × 8.25% = $82.50, for a total of $1,082.50. Billed's invoice software page (checked October 31, 2026) says: "Save your tax rates and settings once, and Billed calculates taxes automatically when you create invoices and estimates."
Tax overview
Each row lists a tax area and its notes. Confirm current figures with your state's tax agency or the IRS.
| Tax type | Rate or basis | Notes |
|---|---|---|
| State sales and use tax | "6.25 percent" | The Texas Comptroller's sales and use tax page (Texas, as retrieved on October 31, 2026): "Texas imposes a 6.25 percent state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services." |
| Local sales and use tax | "up to 2 percent" | The Texas Comptroller's sales and use tax page (Texas, as retrieved on October 31, 2026): local jurisdictions "can also impose up to 2 percent sales and use tax for a maximum combined rate of 8.25 percent." |
| Franchise tax, retail or wholesale | "0.375%" | The Texas Comptroller's franchise tax page (Texas, as retrieved on October 31, 2026) lists "Tax Rate (retail or wholesale)" as "0.375%" in its table headed "2026 and 2027". |
| Franchise tax, other entities | "0.75%" | The Texas Comptroller's franchise tax page (Texas, as retrieved on October 31, 2026) lists "Tax Rate (other than retail or wholesale)" as "0.75%" in its table headed "2026 and 2027". |
| Franchise tax no tax due threshold | "$2,650,000" | The Texas Comptroller's franchise tax page (Texas, as retrieved on October 31, 2026) lists "No Tax Due Threshold" as "$2,650,000" in its table headed "2026 and 2027", and states "Franchise tax rates, thresholds and deduction limits vary by report year." |
| Federal self-employment tax | "15.3%" | In the US (federal), the IRS self-employment tax page (last reviewed or updated October 30, 2026): "The self-employment tax rate is 15.3%." |
Filing requirements
This list isn't a complete checklist for your business.
Sales and use tax permit
The Texas Comptroller's sales tax permit FAQ (Texas, as retrieved on October 31, 2026) states "You must obtain a Texas sales and use tax permit if you are an individual, partnership, corporation or other legal entity engaged in business in Texas and you:" and lists "Sell tangible personal property in Texas;", "Lease or rent tangible personal property in Texas;" and "Sell taxable services in Texas; or". On cost, the Comptroller states "There is no fee for the permit, but you may be required to post a security bond."
Monthly or quarterly returns
The Texas Comptroller's sales and use tax page (Texas, as retrieved on October 31, 2026) states "Taxpayers will be notified by letter after their application for a sales tax permit has been approved whether they will file monthly or quarterly." For monthly filers, the Comptroller states "For monthly filers, reports are due on the 20th of the month following the reporting month."
Quarterly and yearly due dates
The same Texas Comptroller page (Texas, as retrieved on October 31, 2026) lists the quarterly dates as "April 20 to report Jan. – March", "July 20 to report April – June", "Oct. 20 to report July – Sept." and "Jan. 20 to report Oct. – Dec.", and states "For yearly filers, reports of sales for the previous year are due on Jan. 20." The Comptroller adds "If a due date falls on a Saturday, Sunday or legal holiday, the next working day is the due date."
Returns with no sales
The Texas Comptroller's sales tax permit FAQ (Texas, as retrieved on October 31, 2026) states "You are required to file a sales and use tax return even if there are no taxable sales or purchases to report during that filing period."
Annual franchise tax report
The Texas Comptroller's franchise tax page (Texas, as retrieved on October 31, 2026) states "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."
Federal estimated tax
In the US (federal), the IRS estimated taxes page (last reviewed or updated September 25, 2026) states "Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed."
Deductions and write-offs
Confirm with your state how it treats each item.
- Half of SE tax off adjusted gross income: in the US (federal), the IRS self-employment tax page (last reviewed or updated October 30, 2026) states "You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income."
- Bookkeeping method: in the US (federal), the IRS recordkeeping page (last reviewed or updated May 1, 2026) states "You may choose any recordkeeping system suited to your business that clearly shows your income and expenses."
- For federal deductions that fit your situation, talk to a tax professional.
Practical tips
- Check whether a service is taxable before you invoice it. The Comptroller's Publication 96-259 (Texas, as retrieved on October 31, 2026) states "Using a computer for word processing, data entry, production, compilation, storage or manipulation is a taxable data processing service." and "Twenty percent of the charge for data processing services is exempt from tax."
- Find the local rate for each sale. The Texas Comptroller's sales and use tax page (Texas, as retrieved on October 31, 2026) says to "Use the Sales Tax Rate Locator to search for sales tax rates by address."
- Keep your sales tax records. The Texas Comptroller's sales tax permit FAQ (Texas, as retrieved on October 31, 2026) states "you are required to keep records for a minimum of four years."
- See who still owes you before each filing date. Billed's invoice software page (checked October 31, 2026) says "Invoice reports show which invoices are paid, partially paid or past due, and you can see who owes you money and send them a payment reminder."
- Before you file, set these figures beside the Comptroller's and the IRS's current pages, and take questions about your own case to a tax professional.
Frequently asked questions
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At a glance
| Topic | Texas Comptroller or IRS wording |
|---|---|
| State sales and use tax | Comptroller: "Texas imposes a 6.25 percent state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services." (Texas, as retrieved on October 31, 2026) |
| Local sales and use tax | Comptroller: local jurisdictions "can also impose up to 2 percent sales and use tax for a maximum combined rate of 8.25 percent." (Texas, as retrieved on October 31, 2026) |
| Permit fee | Comptroller: "There is no fee for the permit, but you may be required to post a security bond." (Texas, as retrieved on October 31, 2026) |
| Returns with no sales | Comptroller: "You are required to file a sales and use tax return even if there are no taxable sales or purchases to report during that filing period." (Texas, as retrieved on October 31, 2026) |
| Franchise tax threshold | Comptroller: "No Tax Due Threshold", "$2,650,000", in the table headed "2026 and 2027" (Texas, as retrieved on October 31, 2026) |
| Franchise tax report | Comptroller: "The annual franchise tax report is due May 15." (Texas, as retrieved on October 31, 2026) |
| Self-employment tax | IRS, In the US (federal): "The self-employment tax rate is 15.3%." (last reviewed or updated October 30, 2026) |
When this isn't for you
Written for sole proprietors and small businesses selling goods or services in Texas. Income tax, property tax and the franchise tax computation aren't covered here; for those, contact the Texas Comptroller or a tax professional.