Texas Small Business Tax Guide — 2026
Income Tax Rate
No state income tax
Sales Tax Rate
6.25% state + local (total typically 8% — 8.25%)
Filing Deadline
No state income tax return required for individuals
Texas Income Tax
Texas does not impose a state income tax. This means self-employed individuals only pay federal income tax and federal self-employment tax (15.3%) on their business earnings — no state income tax return is required.
Self-Employment in Texas
Texas has no state income tax. Self-employed individuals only pay federal taxes. Texas does impose a franchise (margin) tax on businesses with revenue over $2.47 million.
Estimated Tax Requirements
No state estimated tax payments required. Federal estimated payments still apply.
TexasDeductions & Credits
- No state income tax means no state deductions needed
- Texas franchise tax only applies to businesses with $2.47M+ in revenue
- No corporate income tax — franchise tax is based on margin, not profit
Business Filing Fees
LLC: $300 formation + $0 annual fee (franchise tax report if applicable). Corporation: $300 formation + annual franchise tax.
Key Facts About Texas Taxes
- Texas has no state income tax — constitutionally prohibited
- Largest no-income-tax state by population
- Texas franchise tax only applies to businesses with over $2.47M in total revenue
- High property taxes offset the lack of income tax
- Huge freelancer and small business population, especially in Austin, Dallas, and Houston
Track Your Texas Business Expenses
TaxTidy helps Texas freelancers and self-employed individuals track every business expense with AI-powered receipt scanning. Snap a photo of any receipt and TaxTidy instantly extracts the vendor, amount, and tax category — then maps it to the correct IRS Schedule C line. At tax time, generate an audit-ready PDF report with all your deductions organized and totaled.
Frequently Asked Questions
Does Texas have any taxes for freelancers?
Texas has no state income tax. Most freelancers only pay federal taxes. The Texas franchise (margin) tax applies only to businesses with over $2.47 million in revenue.
Do I need to file a state return in Texas?
No individual state income tax return is required. Businesses may need to file a franchise tax report. Federal returns are still required.
Is Texas good for self-employed people?
Texas is one of the best states for freelancers — no income tax, large business community, and the franchise tax threshold ($2.47M) exempts most small businesses. Property taxes are higher than average.
Official source: Texas Department of Revenue
TaxTidy provides expense organization tools based on the most current US tax law available to it. TaxTidy is not a CPA, Enrolled Agent, or licensed tax professional. All categorizations, deductions, and tax calculations are estimates. Please verify all data for accuracy and consult a certified tax professional before filing.
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