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View our up-to-the-minute list of Franchise Tax Frequently Asked Questions (FAQs)

Revised Texas Franchise Tax Discounts

A taxable entity, after computing the tax due on its taxable margin, is entitled to a discount of the tax imposed if its total revenue (annualized per 12 month period on which the report is based) is less than $900,000.

When the accounting period upon which the franchise tax report is based is more or less than 12 months, a taxable entity must annualize its total revenue to determine its discount percentage.

Upper tier entities (when a tiered partnership election has been made) will qualify for a discount only if the lower tier entity would have qualified for that discount before the attribution of revenue to the upper tier.

The discount percentage is based on the annualized total revenue of the entity before apportionment as follows:

Total Revenue Amount Discount
$300,000.01 - $399,999.99 80 percent of tax due
$400,000.00 - $499,999.99 60 percent of tax due
$500,000.00 - $699,999.99 40 percent of tax due
$700,000.00 - $899,999.99 20 percent of tax due

A taxable entity that elects to use the E-Z computation is eligible for this discount.

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