The Texas franchise tax EZ Computation Report is a simplified filing option for entities with $20 million or less in annualized total revenue. Instead of choosing among the standard margin deduction methods, you multiply your total revenue by a flat 0.331 percent and pay that amount. The form is Form 05-169, and it exists to save small businesses the effort of computing cost of goods sold, compensation, or 70-percent-of-revenue margin calculations. The tradeoff: no deductions, no credits.
Who Qualifies
Eligibility comes down to one number. Your annualized total revenue must be $20 million or less for the report year. Total revenue is gross receipts before any accounting subtractions, drawn from specific line items on your federal income tax return for the accounting period ending in the prior calendar year.1Texas Comptroller of Public Accounts. Texas Franchise Tax Report Forms for 2026
If your entity operated for less than twelve months, you annualize by dividing actual receipts by the number of days in the short period and multiplying by 365. The annualized figure, not the raw figure, is what the threshold measures.
Combined groups can use the EZ method, but the $20 million cap applies to the group’s aggregate revenue. If the group total exceeds $20 million, no member qualifies, even one whose individual revenue is well under the line.2Texas Comptroller of Public Accounts. Requirements for Reporting and Paying Franchise Tax
A few subtractions are permitted when computing total revenue itself, such as bad debts expensed on your federal return, foreign royalties and dividends, and net distributive income from pass-through entities. These reduce the total revenue figure you use for both threshold and tax purposes, but they are not the margin deductions available under standard methods.3Legal Information Institute. 34 Tex. Admin. Code 3.587 – Margin: Total Revenue
When You Don’t Need to File at All
If your annualized total revenue is $2,650,000 or less for the 2026 report year, you owe no franchise tax and don’t file the EZ Computation Report. The No Tax Due Report was discontinued starting with the 2024 report year, so entities under the threshold skip the tax report entirely.4Texas Comptroller of Public Accounts. Franchise Tax Rates, Thresholds and Deduction Limits
You still have to file the Public Information Report or Ownership Information Report, though. Missing that supplemental filing has the same consequence as missing the tax report itself. More on that below.5Texas Comptroller of Public Accounts. No Tax Due Reporting for Report Year 2024 and Later
So the EZ Computation Report is the right form when your annualized total revenue lands between $2,650,001 and $20 million. Below that band, you owe nothing. Above it, you must use one of the standard margin methods.
How the Tax Is Calculated
Total revenue multiplied by 0.331 percent. That’s the whole calculation. The 2026 rate is 0.331 percent for every entity using the EZ method, regardless of industry.4Texas Comptroller of Public Accounts. Franchise Tax Rates, Thresholds and Deduction Limits
Under the standard method, the rate is 0.75 percent for most businesses or 0.375 percent for retailers and wholesalers, but it applies to the taxable margin after deductions rather than to gross revenue. The lower EZ rate is the offset for giving up those deductions.6Texas Comptroller of Public Accounts. Franchise Tax
What You Give Up
Electing the EZ method means no cost of goods sold deduction, no compensation deduction, no other margin deduction, and no franchise tax credits. It’s an all-or-nothing choice for the report year.7Texas Comptroller of Public Accounts. Franchise Tax Frequently Asked Questions
Because the 0.331 percent hits gross revenue rather than a reduced margin, a business with thin profit margins can owe more under EZ than under a standard method. A manufacturer or distributor with substantial cost of goods sold, or a payroll-heavy company that could take the compensation deduction, may find the taxable margin under a standard method is small enough that the higher rate still produces a lower bill. A service business with low material costs and modest payroll is the classic case where EZ wins on simplicity without costing much in tax.
Run the numbers both ways before committing. The choice is made when you file, not before.
What Goes on Form 05-169
The report itself is short. You provide:8Texas Comptroller of Public Accounts. Texas Franchise Tax EZ Computation Report
- Your 11-digit Texas taxpayer number.
- Your four-digit NAICS code for your primary business activity.
- Total revenue calculated from your federal return.
- Annualized revenue, if your accounting period was shorter than twelve months.
The form performs the multiplication at 0.331 percent and produces your tax due. There is a prompt for an early-filing discount if it applies. Accuracy on the revenue figure matters because the Comptroller can cross-reference against IRS records.
Filing, Payment, and Deadlines
The report is due May 15. If May 15 falls on a weekend or holiday, the deadline moves to the next business day.6Texas Comptroller of Public Accounts. Franchise Tax
Most filers submit through the Comptroller’s Webfile system, which accepts electronic check and credit card payments and generates a confirmation number that serves as your proof of timely filing. Electronic filings must be submitted by 11:59 p.m. Central Time on the due date.9Texas Comptroller of Public Accounts. File and Pay
You can extend the filing deadline to November 15 by requesting an extension on or before May 15. The extension is granted tentatively when the request is received, but it carries a payment requirement: you must pay either 90 percent of the current year’s tax or 100 percent of last year’s tax by May 15. Falling short triggers penalty and interest on the shortfall. You can’t use the 100 percent prior-year option if your entity became subject to franchise tax during the prior year or was part of a combined group report that year.10Texas Comptroller of Public Accounts. Franchise Tax Extensions of Time to File
Late filings and payments carry penalties:6Texas Comptroller of Public Accounts. Franchise Tax
- $50 penalty on any report filed late, whether or not tax is owed.
- 5 percent of unpaid tax if paid 1 to 30 days late.
- 10 percent of unpaid tax if paid more than 30 days late.
- Interest on any unpaid balance beginning 61 days after the due date.
The Supplemental Report You Can’t Skip
Filing the EZ Computation Report doesn’t end your obligations. Every taxable entity organized in Texas or with nexus in the state must also file one of two supplemental forms, due the same day as the tax report:11Texas Comptroller of Public Accounts. Texas Franchise Tax Public Information Report and Ownership Information Report
- Public Information Report (Form 05-102), for corporations, LLCs, limited partnerships, professional associations, and financial institutions.
- Ownership Information Report (Form 05-167), for all other taxable entity types.
Each member of a combined group organized in Texas or with Texas nexus files its own PIR or OIR. The form must be signed by an officer, director, or other authorized person. The requirement applies even when your revenue is below the no-tax-due threshold and you owe zero franchise tax.
What Happens If You Don’t File
Failing to file the tax report or the accompanying PIR or OIR lets the Comptroller forfeit your entity’s right to transact business in Texas. A forfeited entity loses the ability to sue or defend itself in Texas courts, which can be crippling in the middle of a contract dispute or a collection matter.12State of Texas. Texas Tax Code Section 171-255 – Liability of Director and Officers
Once forfeiture takes effect, each director or officer becomes personally liable for debts the business incurs in Texas after the missed report’s due date and before privileges are revived. The statute treats that exposure as equivalent to partner liability in a partnership. Reinstating the entity later does not erase the personal liability that accumulated during the forfeiture window.
The only escape for a specific debt is showing it was created over the director’s or officer’s objection, or without their knowledge where reasonable diligence would not have revealed the intent to incur it. That defense is narrow in practice.
Reinstatement requires filing all delinquent reports, paying outstanding tax plus penalties and interest, requesting a tax clearance letter from the Comptroller, and then submitting reinstatement paperwork and fees to the Secretary of State. Two agencies, several weeks, and easily avoided by filing on time.13Texas Comptroller of Public Accounts. Reinstating or Terminating a Business