Self-employed taxes and LLC costs in Texas, 2026
Texas has no personal income tax, and most small LLCs owe no franchise tax either, but every one of them still files with the Comptroller each May.
Total tax on this income in 2026
$17,800
Put aside 21% of each payment · $4,450 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| Texas income tax | $0 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 20.9% |
With an S corp election and a $34,000 salary, about $3,747 less tax (check it).
Computed by Radif Partners from IRS and Texas agency documents read on October 15, 2026 · How we calculate
Forming an LLC in Texas costs $300 with the Secretary of State, and there is no annual report fee after that. The yearly obligation is with the Comptroller instead: every LLC, single-member ones included, is a taxable entity for the franchise (margin) tax. For reports due in 2026 and 2027, a business with annualized total revenue at or below $2,650,000 owes no tax and files only a Public Information Report or Ownership Information Report by May 15, at no cost. A sole proprietor without an LLC files nothing at all. Texas has no state income tax, so a single filer with $75,000 of profit pays only federal income tax and self-employment tax, about $15,495, or $3,874 per quarterly payment. An S corporation is treated like an LLC for franchise tax, so the S election is a purely federal matter here; at $120,000 of profit and a $50,000 salary it saves about $5,312.
Texas at a glance, 2026
| LLC filing fee | $300 |
| No Secretary of State annual report; annual franchise tax report plus Public Information Report (Form 05-102) or Ownership Information Report (Form 05-167) filed with the Comptroller | $0 a year |
| Income tax | none on wages or business income |
| S corporation election | not recognized |
| Tax on $75,000 of profit (single) | $15,495 in all, $0 to Texas |
Texas replaced an income tax on businesses with a tax on their margin, and it reaches entities the IRS barely notices. The Comptroller's franchise tax overview counts single-member LLCs as taxable entities, while a sole proprietorship is outside the tax. For a freelancer under the threshold the difference is paperwork, not money, but it is a deadline every year.
The May 15 report and the $2.65 million line
The Comptroller sets the no-tax-due threshold at $2,650,000 of annualized total revenue for reports due in 2026 and 2027, up from $2,470,000. Above it, the rate is 0.375% for retail and wholesale and 0.75% for other businesses, applied to the taxable margin, with an EZ computation at 0.331% of apportioned revenue for companies under $20 million. Few self-employed people get close. Since report year 2024 the separate No Tax Due Report has been retired, as the 2024 reporting update explains: an LLC under the threshold files only the Public Information Report (Form 05-102), or the Ownership Information Report for some entity types, by May 15. It is a yearly deadline worth writing into the calendar next to the federal estimated tax dates.
Veteran-owned businesses
The same Comptroller update notes that a qualifying new veteran-owned business files no franchise tax report and no information report during its first five years.
What moving to Texas changes
People ask about Texas because of what it does not tax. The gap is the state income tax you would pay elsewhere, and it grows with profit. Compare with California, where the LLC also owes $800 a year:
The same profit in another state
California minus Texas
$4,254
| California | $4,254 |
| Texas | $0 |
Federal tax does not move with you. On $120,000 of profit, a single filer in Texas still owes about $28,462 in federal income tax and self-employment tax. The state income tax comparison lines up every state for the same profit. Residency follows where you live and work: an LLC formed in Texas by someone living in another state does not escape that state's tax.
The S corporation in Texas
An S corporation is a taxable entity for franchise tax on the same terms as an LLC, with the same threshold and rates, and there is no personal income tax for the election to reduce. The decision therefore turns on federal payroll tax alone, plus the cost of Texas unemployment tax on the owner salary, which the Texas Workforce Commission sets for each employer. The LLC vs S corp page shows the federal side line by line.