2024 Texas Franchise Tax Reporting Changes

By Zel McGhee - Updated on March 4, 2024

Understanding the Impact of Senate Bill 3 on Reporting Thresholds and Requirements for Texas Businesses

Texas Franchise Tax Changes

In July 2023, Senate Bill 3 was passed by the legislature, bringing significant changes to franchise tax reporting in Texas. One notable adjustment is the increase in the no tax due threshold to $2.47 million, effective for reports due on or after January 1, 2024.

Entities falling under this threshold are no longer obligated to file a No Tax Due Report. Instead, they are required to submit either Form 05-102 (Public Information Report) or Form 05-167 (Ownership Information Report). Additionally, for combined groups, even if individual members have revenue below the threshold, the entire group must be included in the combined group report.

A noteworthy exemption applies to new veteran-owned businesses, deemed eligible for a five-year grace period from filing No Tax Due Reports starting January 1, 2024.

As a consequence of these changes, the No Tax Due Information Report (Form 05-163) is discontinued for the 2024 report year and beyond. This discontinuation stems from the fact that entities meeting the no tax due threshold and new veteran-owned businesses are no longer obligated to file this report.

These changes aim to streamline reporting obligations and aid small business owners to better navigate and adapt to the evolving landscape of Texas Franchise Tax regulations.

For further details and to stay informed, you can access the original Texas State Comptroller article via the following link: https://comptroller.texas.gov/taxes/franchise/ntd-rpt-updates-2024.php.