Taxation in Texas

Updated on Tuesday 05th March 2019

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Those looking for company formation in Texas will benefit from an important tax relief: there is no corporate income tax in Texas, the state that joins other five business destinations in USA where there is no such tax imposed. However, you should bear in kind the franchise tax, but for more information in this matter, feel free to talk to our team of company formation specialists in USA. They can help you start a business in USA, including Texas.
 

No corporate income tax in Texas

 
Texas, South Dakota, Ohio, Nevada, Wyoming and Washington are six American states where there is no corporate income tax imposed on the profits generated by companies established there. Also, it is good to know that there is no personal income tax in Texas.
 

What is the franchise tax rate in Texas?

 
The franchise tax is imposed for corporations, limited liability companies, professional corporations, savings and loan associations, trusts, partnerships, joint ventures and other legal entities established in Texas, except sole proprietorships, unincorporated passive entities etc. Here is the taxable margin on which the franchise tax is calculated, if equal to one of the following amounts:
 
  • 70% of the total registered revenue;
  • 100% of the total revenue minus the cost of goods sold;
  • 100% of the total revenue minus the compensation;
  • the total revenue except $ 1 million.
     
It is good to know that your company is not subject to the franchise tax if the business’s total tax due is less than $1,000 or if the business’s annualized total income is less than or equal to the no-tax-due threshold of $1,130,000 for this year. Even if the tax regime might seem complex, it is best to consider the services of our team of specialists and find out more about the taxes you need to pay in Texas. If you want to start a company in USA, and especially in Texas, do not hesitate to address your inquiries to our company formation specialists in USA for comprehensive information and support.
 

What is the sales tax rate in Texas?

 
Texas imposes a standard sales tax ranging from 6.25% to 8.25%, comprising the tax rate collected by municipalities in this state. For instance, the sales tax rate of 8.25% is applicable in Dallas, San Antonio and Houston.
 

Taxes for LLCs in Texas

 
Limited liability companies are considered pass-through entities, and therefore, the taxation is made on the incomes of each company member. Moreover, the franchise tax is imposed for such type of companies.
 

Taxes for sole proprietors in Texas

 
Sole proprietorships in Texas benefit from tax advantages because there are no personal income taxes imposed on such businesses. We remind that Texas aligns with other five American states where there are no corporate and income taxes imposed. We kindly invite you to read the general guide to company incorporation in Texas and find out information about how you can open a company in this state. You can also talk to our specialists and discover the ways in which you can set up a company in any preferred US state for business. Our company formation agents in USA are at your service with complete assistance and information, so feel free to solicit a personalized offer.
 

Other tax facts in Texas

 
A property tax of 1.83% is imposed for households in Texas, and it represents the primary income source in most of the cities. We also mention that in Dallas, the property tax is established at 1.99%, while in Houston is set at a rate of 2.09%. It is good to know that there is no estate tax in Texas since 2005. If you would like to start a business in USA, do not hesitate to get in touch with us.
 

What are nexus and multistate business?

 
Foreign entrepreneurs who have a business in Texas and in other American states too should bear in mind the local taxation applied in those states. This means that the income generated in Texas might be subject to taxation if there are established companies outside this state. Multistate business and Nexus can be entirely explained by our team of company formation representatives in USA who can also offer details about how you can open a company in Texas. Let us remind you that we are at your disposal with complete guidance and information because it is important to skip all the possible misunderstandings that might occur during the registration procedure of a business. Also, it is important to have an idea about the taxation structure in Texas and about the taxes imposed on each type of company, in order to properly register from a taxation point of view and to align with the requirements in this matter.
 
Looking for company incorporation in USA? Feel free to contact our company formation agents in USA and solicit a personalized offer.