Texas LLC structure and cost: no income tax, no transfer tax, and a margin tax most people never pay

Texas charges no income tax and no real estate transfer tax. That second one gets almost no attention and quietly decides more real estate structuring than the first, because it means moving a building into its own LLC costs recording fees instead of a percentage of the value.

What Texas charges instead is a franchise tax on margin, and the headline there is that most LLCs owe nothing. The trap is that owing nothing and filing nothing are different things, and the gap between them is the subject of the filing page.

Texas taxes no income and no deeds, which makes one entity per property cheap to build here.

Where the entity actually lives

A Texas LLC has a birthplace and a residence, and the where your LLC lives doctrine decides which controls what. Texas governs the internal affairs covered on the governance page; where the company actually operates governs tax and the courtroom.

Texas can pull an out-of-state LLC into its franchise tax system on Texas receipts alone, with no office here.

Texas asserts franchise tax nexus over out-of-state entities with Texas-source receipts above a threshold, so a company selling into Texas can owe Texas filings without ever having an office or an employee in the state. That runs in both directions: forming in Texas does not exempt you from other states’ rules, and staying out of Texas does not exempt you from Texas.

No income tax, and the margin tax that replaces it

Texas has no personal or corporate income tax. The franchise tax, often called the margin tax, is the substitute, and it is charged for the privilege of doing business rather than on profit.

Most Texas LLCs owe no franchise tax and still have to file a report every year.

For the 2026 and 2027 report years the no-tax-due threshold is $2.65 million in annualized total revenue, raised from $2.47 million for 2024 and 2025 and from $1.23 million before that. The Comptroller indexes it, so check the current figure each year. An LLC under the threshold owes zero. Above it, the rate is 0.375% for retail and wholesale businesses and 0.75% for everyone else, with a simplified computation available at 0.331% for entities at or below $20 million in revenue, applied to margin rather than to gross revenue.

The number that matters more than the rate is the filing obligation, which does not scale with the tax. An LLC with $40,000 of revenue owes nothing and must still file, and the consequence of not filing is on the protection page as well as the filing page, because it reaches the owners personally.

No transfer tax, and what that buys you

Here is the structural advantage nobody advertises.

Texas charges no real estate transfer tax, so contributing a building into its own LLC costs recording fees and nothing else.

Move a property into an entity in Florida and the documentary stamp tax reaches the mortgage on it. Do the same in Nevada and the county takes a percentage of the value. In Texas there is no state deed tax at all, which makes the standard asset-protection structure, one property per LLC, cheap to assemble and cheap to rearrange. For an investor holding several properties, that difference compounds across every acquisition and every restructuring.

One hard limit sits next to it, and it is on the protection page too: the Texas homestead exemption protects an individual, not an entity. Whatever you move into an LLC, never move the home.

Series LLCs, and the tax answer that is only half settled

Texas was one of the first series states and remains one of the most used.

Texas treats a series LLC as one entity for its own franchise tax, while the federal answer has never been finalized.

Subchapter M of Chapter 101, beginning at § 101.601, has allowed a Texas company agreement to establish series with separate assets, members, and liability since 2009, and a 2021 amendment added registered and protected series with their own filing mechanics, aligning Texas with the Delaware-style model. For Texas franchise tax purposes the whole structure is treated as a single entity, which keeps the state compliance simple. Federally, the IRS proposed treating each series as its own entity in 2010 and never finalized the rule, so practitioners work from an unfinished sentence. The series LLC page covers what the internal walls are actually worth, and the short version applies here: the filing savings are real, the bookkeeping burden of ten series equals ten LLCs, and Texas has one of the country’s larger bodies of series practice without much case law testing the walls.

Privacy is weak

Texas is not a privacy state, and the annual filing is why.

The Public Information Report names your members and managers every year, so a Texas LLC does not hide ownership.

The report Texas requires each May discloses the people running and owning the company, which puts them on the public record annually. Wyoming requires no such list. If anonymity is the goal, Texas is the wrong tool, and the anonymous LLC page explains the general limits of the ones that work.

Moving a company in or out

Texas permits conversion and domestication, so a company can enter or leave as the same legal entity, keeping its history, its accounts, and its contracts. The two standing cautions apply: read the company’s own agreements first, because a change-of-control or assignment clause can be tripped by a conversion that is otherwise clean, and move while the sky is clear, since a change of states after a creditor appears reads as a fraudulent transfer.

The bottom line

Texas has no personal or corporate income tax; the franchise margin tax takes its place.

Most LLCs owe no franchise tax, with the 2026 no-tax-due threshold at $2.65 million in annualized revenue, and the filing is required regardless.

Texas charges no real estate transfer tax, which makes one entity per property genuinely inexpensive to build and rearrange.

The homestead exemption protects individuals only, so the home never belongs in the entity.

Texas has authorized series LLCs since 2009 and added registered series in 2021, treating the structure as one entity for state franchise tax while the federal answer remains unfinalized.

The annual Public Information Report discloses members and managers, so Texas offers no meaningful entity privacy.

What this page does not cover

This page is about where the entity lives, what it can be, and what it costs to hold. How creditors reach you, including the charging order and the forfeiture trapdoor, is on the protection page. What the statute lets your company agreement do is on the governance page. The May 15 deadline, the penalties, and reinstatement are on the filing page.

Last verified July 2026.