Texas LLC in United States
LLC · Formation from $300
Last verified: June 10, 2026
Corporate Tax
0.0%
State Tax
0.0%
Formation Cost
$300
Annual Fee
$0
Comparison Scores
Privacy, remote setup, banking, and tax efficiency
Calculate full formation cost
Break down one-time filing fees and recurring costs for any supported entity type.
Who Should Choose This?
Profiles that typically benefit from this entity
- Founders looking for a business-friendly state with no personal income tax.
- E-commerce and tech startups expecting high revenue but under the $2.65M franchise tax threshold.
- Real estate investors purchasing property in Texas.
- Non-US residents wanting a reputable US entity with low ongoing maintenance fees.
Who Should Avoid This?
Scenarios where another structure may be better
- Bootstrapped founders looking for the absolute lowest initial formation cost (e.g., Wyoming or New Mexico are cheaper).
- Businesses expecting massive revenue (over $2.65M) with low profit margins, as the franchise tax is based on revenue/margin, not net income.
- Founders seeking absolute anonymity, as Texas requires listing managers/members on the annual Public Information Report.
Advantages
- +No state personal income tax, allowing founders to keep more of their earnings.
- +High franchise tax threshold ($2.65 million for 2026), meaning most small businesses pay $0 in state franchise tax.
- +Strong liability protection and a highly business-friendly legal environment.
- +No annual reporting fee for the Public Information Report, keeping ongoing maintenance costs low.
- +Excellent infrastructure and a booming economy, making it attractive for investors and talent.
Disadvantages
- -High initial formation fee ($300) compared to some other states like Wyoming or New Mexico.
- -Franchise tax calculations can be complex if revenue exceeds the $2.65 million threshold.
- -Strict requirement to file an annual Public Information Report, even if no tax is due; failure to file results in a $50 penalty and potential loss of good standing.
- -Less privacy than states like Wyoming or Delaware, as member/manager names may be listed on the Public Information Report.
Formation Steps
Choose a unique business name that includes 'LLC' and check its availability in the Texas Comptroller's database.
Appoint a Registered Agent with a physical address in Texas to receive legal documents.
File the Certificate of Formation (Form 205) with the Texas Secretary of State and pay the $300 filing fee.
Draft an Operating Agreement to outline the ownership structure and operating procedures of your LLC.
Obtain an Employer Identification Number (EIN) from the IRS for tax purposes and opening a US bank account.
Apply for any necessary local business licenses and permits depending on your industry and city.
Open a US business bank account to keep personal and business finances separate.
Cost Breakdown
Detailed breakdown of formation and ongoing costs
| Item | Type | Amount |
|---|---|---|
| State filing fee | One-time | $300 |
| Registered Agent | Annual | $99 |
| EIN (Employer Identification Number) | One-time | $0 |
| Operating Agreement | One-time | $0 |
| First year total | $399 | |
| Annual ongoing | $99 | |
Real-World Examples
Typical use cases for this entity type
- A non-US resident e-commerce founder sets up a Texas LLC to access Stripe and US banking, benefiting from the $0 annual state fee.
- A local real estate investor uses a Texas LLC to hold rental properties, protecting their personal assets from tenant lawsuits.
- A SaaS startup incorporates in Texas to attract talent in Austin while avoiding state personal income tax for its founders.
Common Mistakes
Pitfalls to avoid during setup and operations
- Forgetting to file the annual Public Information Report by May 15 because there is no fee, leading to a $50 penalty and loss of good standing.
- Failing to maintain a registered agent with a physical address in Texas.
- Mixing personal and business finances, which can pierce the corporate veil.
- Not drafting an Operating Agreement, leaving the LLC subject to default Texas state laws in disputes.
- Assuming 'no state income tax' means no taxes at all, ignoring federal taxes, sales tax, or the franchise tax if revenue grows.
Other entity types
Other formation options in United States
Compare with Other Countries
| Country / Type | Tax | Formation | Annual |
|---|---|---|---|
| 🇺🇸 Texas LLC(LLC) | 0.0% | $300 | $0 |
FAQ
How much does it cost to form an LLC in Texas?
The state filing fee for the Certificate of Formation is $300.
Do I have to pay an annual fee for my Texas LLC?
There is no annual fee to file the Public Information Report, but you must file it every year by May 15.
What is the Texas Franchise Tax?
It is a privilege tax imposed on businesses. For 2026, LLCs with annualized revenue under $2.65 million owe no tax.
Can a non-US resident form a Texas LLC?
Yes, non-US residents can form a Texas LLC. You do not need to be a US citizen or resident.
Do I need a registered agent in Texas?
Yes, Texas law requires all LLCs to maintain a registered agent with a physical street address in the state.
Does Texas have a state income tax?
No, Texas is one of the few states that does not levy a personal state income tax.
What happens if I miss the May 15 deadline for the annual report?
You will face a $50 late penalty and risk losing your LLC's good standing with the state.
Do I need an Operating Agreement in Texas?
While not legally required by the state, it is highly recommended to have one for liability protection and opening a bank account.
Detailed Tax Rates
Corporate Income Tax
| From | To | Rate |
|---|
The US federal corporate income tax rate is a flat 21%. Texas does not levy a state corporate income tax, but imposes a Franchise Tax on business revenues.
Personal Income Tax (Top rate: 37.0%)
| From | To | Rate |
|---|---|---|
| $0 | $12,400 | 10.0% |
| $12,401 | $50,450 | 12.0% |
| $50,451 | $107,625 | 22.0% |
| $107,626 | $205,400 | 24.0% |
| $205,401 | $260,850 | 32.0% |
| $260,851 | $652,100 | 35.0% |
| $652,101 | No limit | 37.0% |
Texas has no state personal income tax. LLC profits pass through to members and are taxed at federal individual income tax rates, which are progressive up to 37%.
Capital Gains Tax
20.0%
Long-term capital gains are taxed at federal rates of 0%, 15%, or 20% depending on income. Texas does not impose any state capital gains tax.
VAT / GST
6.3%
Registration Threshold: USD500,000
The US has no federal VAT. Texas imposes a 6.25% state sales tax, with local additions capping the combined rate at 8.25%. Certain digital services like SaaS and data processing are taxable in Texas.
Withholding Tax
The US imposes a 30% withholding tax on dividends, royalties, and interest paid to non-residents. This rate can be significantly reduced or eliminated under an applicable double tax treaty.
Payroll & Social Security
Federal FICA taxes consist of 6.2% for Social Security and 1.45% for Medicare, paid by both employer and employee. Texas employers also pay state unemployment tax (SUTA).
Other Taxes
Texas Franchise Tax
For 2026, the Texas Franchise Tax threshold is $2.65 million [1.1.3]. Businesses under this revenue pay no tax. Above this, the rate is 0.375% for retail/wholesale and 0.75% for other businesses.
Property Tax
Texas has no state property tax, but local jurisdictions levy property taxes on real estate and income-producing tangible personal property.
Formation Requirements
Minimum Capital
No requirement
No minimum capital requirement for a Texas LLC.
Local Director
Not Required
LLCs are managed by members or managers; no local residency is required.
Registered Office
Required
Virtual office allowed. $99 - $300 annually for a professional registered agent.
Notarization Required
No
Power of Attorney (Remote)
Not Required
Not required if using a registered agent or online formation service.
Timeline
Standard: 10-15 days
Expedited: 1-3 days ($50)
Required Documents
Compliance & Reporting
Annual Filings
Audit Requirement
Not Required
No statutory audit requirement for small LLCs.
Accounting Standard
US GAAP
Tax Return Deadline
May 15 for Texas Franchise Tax; March 15 or April 15 for Federal Tax depending on entity classification.
VAT Filing Frequency
N/A
Data Protection
Texas Data Privacy and Security Act (TDPSA) applies to businesses processing personal data.
Banking & Payments
Mercury
Remote-friendlyPopular fintech for US startups, allowing remote account opening for non-resident founders.
Relay
Remote-friendlyBusiness banking platform offering multiple accounts and cards, highly friendly to non-US residents.
Wise Business
Remote-friendlyExcellent for multi-currency holding and low-cost international wire transfers.
Chase Business
Traditional top-tier US bank, requires an in-person branch visit to open an account.
Payment Gateways
Stripe, PayPal, Square, Paddle, Authorize.Net
Currency
USD
Multi-Currency: Supported
Account Opening
Opening a traditional bank account in the US usually requires an in-person visit. However, non-resident founders can easily open accounts remotely using fintech platforms like Mercury or Relay, provided they have an EIN and formation documents.
Practical Information
Timezone
UTC-6 to UTC-7 (Standard Time)
Business Language
English
Legal System
Common law
Ease of Doing Business
#6
IP Protection
World-class intellectual property protection through the USPTO. Strong enforcement of patents, trademarks, and copyrights.
Double Tax Treaties
57 countries
Notable treaties: United Kingdom, Canada, Germany, Japan, Australia, Turkey
Visa & Residency Options
E-2 Treaty Investor Visa
Allows entrepreneurs from treaty countries to enter and work in the US based on a substantial investment in a US business.
L-1 Intracompany Transferee Visa
Enables a foreign company to transfer an executive or manager to a US office or to establish a new affiliated US office.
O-1 Extraordinary Ability Visa
For individuals with extraordinary ability in business, science, or arts, often used by successful startup founders.
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Changelog
Data updates and changes on this page
Updated Texas Franchise Tax threshold to $2.65 million for the 2026 tax year and verified $300 formation fee.
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