Texas Tax and CPA Services: State, County and City Taxes

Texas goes further than most no-income-tax states: its Constitution bars the Legislature from taxing individual income. What remains is a franchise tax on most entities, a sales tax with local add-ons, local property taxes set by taxing units, and payroll rules where workers' compensation is optional for most private employers. This guide is written for tax year 2025 returns and 2026 planning.

The constitutional ban, and what it does not cover

Article VIII of the Texas Constitution says the Legislature may not tax the net incomes of individuals, including an individual's share of partnership income. A capital gains ban was added in November 2025. So Texas residents file no state return, employers withhold no state income tax, and there is no pass-through entity tax election, because there is no state income tax to offset.

Business entities are another matter. The Constitution does not bar the franchise tax, so an LLC that passes all its income to its owners still files a state report. Texas residents also remain subject to federal tax and to other states' taxes on income earned there.

Franchise tax: the margin tax

The Comptroller describes the franchise tax as a privilege tax on taxable entities formed or doing business in Texas, including corporations, LLCs (single-member too), S corporations, partnerships and trusts. Sole proprietorships and general partnerships owned directly by individuals are generally excluded. Tax is on margin, which you may calculate one of four ways: 70% of revenue, or revenue minus cost of goods sold, compensation or $1 million.

Entities with revenue up to $20 million may use the EZ computation at 0.331% for 2024 through 2026. Reports are due May 15 (the next business day if it falls on a weekend). Entities that owe nothing still file a Public Information Report or Ownership Information Report, and the Comptroller warns that missed reports lead to a notice of intent to forfeit the right to transact business. An out-of-state entity has franchise tax nexus at $500,000 of Texas gross receipts.

Sales and use tax

The state rate is 6.25% on most sales, leases, rentals and taxable services, and local governments may add up to 2%. Returns are due on the 20th of the following month for monthly filers. Remote sellers need a permit once total Texas revenue reaches $500,000 in the preceding 12 calendar months, with collection starting by the first day of the fourth month after the month they crossed. See our sales tax nexus guide.

Property tax: local, appraisal-driven and protestable

The Comptroller states that Texas has no state property tax. County appraisal districts set values, and cities, counties, schools and special districts set rates. Protests to the appraisal review board are generally due May 15 or 30 days after the district mails the notice, whichever is later. Bring evidence. You can later appeal to district court within 60 days of the order.

For 2026 tax bills, the Comptroller lists a $140,000 school district homestead exemption, plus $60,000 more for homeowners 65 or older or disabled. The general application deadline is before May 1. Because property tax is the largest state and local deduction for many Texans, read our SALT deduction guide.

Payroll: unemployment, new hires and optional workers' compensation

The Workforce Commission taxes the first $9,000 of each employee's wages for 2026. Rates for 2026 range from 0.32% to 6.32%, and new employers pay 2.70%. Register within ten days of becoming liable; reports and tax are due the last day of the month after each quarter. Wages paid to LLC members and corporate officers are reportable. See our state unemployment guide and new hire reporting guide.

The Department of Insurance says private employers can choose to carry workers' compensation. Employers without coverage, called nonsubscribers, must tell the state and report injuries involving more than one day of lost time. Talk to counsel and your customers' contract terms before dropping a policy.

Houston, Dallas, Austin and the suburbs

Appraisal districts vary by county, so your home in Harris, Dallas, Travis, Collin or Fort Bend County is valued by a different office. Households in Plano, Frisco, Irving and Sugar Land, including many H-1B and NRI families, should budget for local property tax, which is set locally and can be protested. We serve Dallas, Houston and Austin clients remotely.

How we can help

For people relocating to Texas we help end residency in the old state, file part-year returns and document the move. For owners we handle franchise reports, Public Information Reports, sales tax permits, payroll registration and Secretary of State filings (its SOSPortal replaces SOSDirect starting September 29, 2026), and we can respond to a state tax notice. See multi-state tax and payroll services.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.