Do I have to file a Texas state tax return? Short answers for owners

Do I have to file a Texas state tax return? Not for personal income, since Texas has no personal income tax, but LLCs, S corporations and most partnerships still file Texas franchise tax reports. ^[1][2]

Do I have to file a Texas state tax return?

Check how your business is taxed, then file the franchise tax report and its information report each year.

2027 franchise tax reports are due May 17, 2027. The usual date, May 15, 2027, is a Saturday, so the due date moves to the next business day. ^[2]

Texas taxes businesses through a franchise tax, a privilege tax on each taxable entity formed in Texas or doing business there. For 2026 and 2027 reports the rate is 0.75% of taxable margin (0.375% for entities primarily in retail or wholesale trade), and an entity with annualized total revenue of $2,650,000 or less owes no franchise tax but still files an information report. ^[3][4][2]

What happens if I hire my first employee?

Set up your Texas Workforce Commission account before the first payday, report each new hire and plan to file online.

Texas employers must report new hires and rehires within 20 calendar days from the date the employee starts earning wages (rule in force for 2026). ^[5]

Texas unemployment tax applies to the first $9,000 of each employee's wages in 2026. ^[6]

A new Texas employer generally pays state unemployment tax at 2.70% for its first six calendar quarters, on the first $9,000 of each employee's wages each year; for 2026 there is no deficit tax and the obligation assessment rate is 0.01% for experience-rated employers. General example for 2026: at 2.70%, the tax is $243 per employee who earns at least $9,000. ^[6]

Texas employers must file wage reports and pay unemployment tax electronically; only employers with a hardship waiver from TWC can mail them (TWC pages, checked October 27, 2026). ^[7]

When are unemployment tax reports due, and what if I am late?

File each quarterly wage report on time; if you miss one, ask for a waiver and give your reason.

Texas employers file the quarterly wage report and pay unemployment tax by the last day of the month after each quarter; a date on a Saturday, Sunday or TWC legal holiday moves to the next business day (TWC due dates page, checked October 27, 2026). General example: the July to September 2026 report is due November 2, 2026 because October 31, 2026 is a Saturday, and the next ones are due February 1, 2027, April 30, 2027 and August 2, 2027. ^[7]

A Texas employer that files its quarterly wage report late pays $15 if it is filed within 15 days after the due date; after that, but within the first month, the penalty is $30 plus 0.05% of the wages not reported, and it grows in the second and third months (Labor Code s. 213.022, in force for 2026). General example for 2026: a report showing $50,000 of wages, due November 2, 2026 and filed November 25, 2026, carries a $55 penalty ($30 + 0.05% x $50,000). ^[8]

If a Texas quarterly wage report is filed in the second month after its due date, the penalty adds a further $30 plus 0.1% of unreported wages to the first-month amount, and in the third month a further $30 plus 0.2% (Labor Code s. 213.022, in force for 2026). General example for 2026: a report with $50,000 of wages filed in the second month late owes $135 ($55 for the first month plus $30 + 0.1% x $50,000). ^[8]

Unpaid Texas unemployment tax draws interest of 1.5% of the tax for each month or part of a month it stays unpaid, up to 37.5% of the tax (Labor Code s. 213.021, in force for 2026). General example for 2026: $1,000 of tax paid in the third month after its due date owes $45 of interest (1.5% x 3 x $1,000). ^[8]

A Texas employer that does not keep required payroll records, makes a false report to TWC or breaks another TWC rule pays a $30 penalty, plus $30 for each day the violation continues starting on the 10th day after TWC gives written notice (Labor Code ss. 213.023 and 213.024, in force for 2026). General example for 2026: a records violation that continues 5 days past that point costs $180 ($30 + 5 x $30). ^[8]

A Texas employer can ask TWC to waive penalties and interest on a late report through a contact request that gives the reason and the quarters involved, and TWC reviews the request within 30 days (TWC due dates page, checked October 27, 2026). ^[7]

How often will I file sales tax?

Read the letter that comes with your permit and follow the schedule it sets.

The Comptroller tells each new Texas sales tax permit holder by letter whether to file monthly or quarterly. Monthly reports are due the 20th of the next month; the next quarterly reports are due January 20, 2027, April 20, 2027, July 20, 2027 and October 20, 2027, and yearly filers report 2026 sales by January 20, 2027. A due date on a weekend or legal holiday moves to the next working day. ^[9]

Does what I sell change the sales tax?

Check each product line against these exemptions before you set up your register, and keep the product labels on file.

Over-the-counter drugs and medicines with an FDA Drug Facts label are exempt from Texas sales tax; a drug without that label is exempt only when a physician prescribes or dispenses it (2026 guidance). ^[10]

Medicated dental products such as toothpaste, mouthwash and mouth rinse that carry an FDA Drug Facts label are exempt from Texas sales tax (2026 guidance). ^[10]

Since September 1, 2023, wound care dressings, adult and children's diapers, baby wipes, feminine hygiene products, maternity clothing, breast milk pumping products and baby bottles have been exempt from Texas sales and use tax (SB 379; Comptroller notice, rule in force for 2026). General example for 2026: a clinic buying $200 of wound care dressings pays no sales tax on them; without the exemption they would carry $12.50 of state tax (6.25%) plus local tax. ^[11]

Dietary and nutritional supplements such as vitamins are exempt from Texas sales tax, but products containing CBD do not qualify for that exemption (Comptroller healthcare items page, checked October 27, 2026). General example for 2026: a medical practice that sells $200 of vitamins and a $100 CBD product to patients charges tax only on the CBD product, $6.25 of state tax (6.25%) plus local tax. ^[10]

I build or repair property. How does sales tax work on my jobs?

Decide whether each job is a lump-sum or separated contract before you buy materials, because that decides who pays the tax.

A Texas homebuilder on a lump-sum contract is the final consumer: it pays sales tax on the equipment, materials and taxable services it buys and charges the customer no tax on the contract price (2026 guidance). ^[12]

A Texas homebuilder on a separated contract, which states labor and materials as separate charges, is a retailer of the materials and must collect sales tax on the agreed contract price of the materials, which may not be less than what it paid for them (Comptroller homebuilder page, checked October 27, 2026). General example for 2026: materials billed at $40,000 on a separated contract carry $2,500 of state tax (6.25%) plus local tax, collected from the customer. ^[12]

Under a separated contract, a Texas repair or remodeling contractor buys materials tax free with a resale certificate, then charges the customer state and local sales tax on the materials; the construction labor charge is not taxed (2026 guidance). ^[13]

Real property services are taxable in Texas, except when a homebuilder buys them as part of building a new home (2026 guidance). ^[12]

A homebuilder on a lump-sum new home contract does not owe tax on real property services it buys for the new residential structure (2026 guidance). ^[12]

A contractor doing nontaxable real property maintenance pays sales tax on the taxable items it buys to do the work, and replacement or repair parts it puts in are taxable (2026 guidance). ^[13]

I run trucks across state lines. What does a late fuel tax report cost?

File fuel tax reports on time, since late or missing reports carry a penalty and interest.

A Texas IFTA trucking licensee that files late, does not file or underpays owes a penalty of $50 or 10% of the delinquent tax, whichever is more, and interest at 9% a year (0.75% a month) (Comptroller IFTA page, checked October 27, 2026). General example for 2026: $2,000 of unpaid IFTA tax draws a $200 penalty. ^[14]

Key Texas dates for owners

Put these dates in your planner now so a report never goes in late.

• November 2, 2026: Texas unemployment tax wage report and payment for July to September 2026 ^[7]
• February 1, 2027: Texas unemployment tax wage report and payment for October to December 2026 ^[7]
• April 30, 2027: Texas unemployment tax wage report and payment for January to March 2027 ^[7]
• May 17, 2027: 2027 franchise tax report, filed by corporations, LLCs, S corporations and most partnerships ^[2]
• August 2, 2027: Texas unemployment tax wage report and payment for April to June 2027 ^[7]

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General information from the official sources listed below, checked October 27, 2026. Not tax or legal advice.