Texas

Texas imposes NO CORPORATE INCOME TAX on C-corporations. However, Texas imposes a gross receipts or margin tax in lieu of a corporate income tax. Texas's rate structure is classified as "Gross Receipts Only" for purposes of this comparison.

Texas has no corporate income tax. Instead, Texas imposes the Franchise Tax (sometimes called the 'margin tax') based on a taxable margin. Effective 2024, businesses with annualized total revenue under $2.47 million owe no franchise tax (no-tax-due threshold). Above that, rates are 0.375% (retail/wholesale) or 0.75% (other businesses) of taxable margin.

Texas's Franchise Tax / Margin Tax functions as the state's primary business tax. The taxable margin is the lesser of (a) total revenue minus cost of goods sold, (b) total revenue minus compensation, (c) total revenue minus $1 million, or (d) 70% of total revenue. EZ Computation available for entities with revenue under $20 million at 0.331%.

Texas's Franchise Tax (margin tax) functions similarly to a modified gross receipts tax, since the taxable margin starts from total revenue with limited deductions. Rates: 0.375% (retail/wholesale) or 0.75% (other) for entities above the $2.47 million threshold.

S-corps, partnerships, and LLCs are not subject to Texas corporate income tax (since none exists), but they ARE subject to the Texas Franchise Tax / Margin Tax if their annualized total revenue exceeds $2.47 million. Texas has no individual income tax, so pass-through income is otherwise untaxed at the state level.

For current corporate tax rules in Texas, consult the state's official source at https://comptroller.texas.gov/taxes/franchise/. Rates and rules change annually — verify with a qualified tax professional before taking any action.