Texas does not impose a corporate income tax; the franchise (margin) tax applies to corporations

# Summary

Texas does not impose a corporate income tax. There is no Texas return that taxes a corporation's net income, and no Texas corporate income tax rate.

The exception is the franchise tax, commonly called the margin tax: a privilege tax under Tax Code Chapter 171 on every "taxable entity" doing business in Texas — corporations squarely included. It is computed on taxable margin (total revenue less the greatest of cost of goods sold, compensation, 30 percent of revenue, or a flat $1 million), which makes it income-adjacent but not an income tax; a corporation can owe margin tax in a year with no profit.

# The franchise (margin) tax in numbers

Tex. Tax Code § 171.002: the rate is 0.75 percent of taxable margin, reduced to 0.375 percent for entities primarily engaged in retail or wholesale trade. An E-Z computation (0.331 percent of apportioned revenue) is available below a revenue ceiling.

Since Senate Bill 3 (2023), an entity whose annualized total revenue is at or below the no-tax-due threshold — $2.47 million for reports due in 2024 and 2025, $2.65 million for 2026 — owes no franchise tax and no longer files a No Tax Due Report, though it must still file its Public Information Report or Ownership Information Report. Above the threshold the annual franchise report is due May 15.

# Nothing reaches the shareholder

Dividends and capital gains from a Texas corporation face no Texas tax at the individual level: Tex. Const. art. VIII, § 24-a (adopted 2019) forbids an individual income tax, as covered by the individual determination for Texas. The franchise tax is the only Texas-level levy on the corporate enterprise, and it stops at the entity.