If you are a business owner in Texas, recent changes in the franchise tax law will affect your filing obligations. The Texas Comptroller of Public Accounts has announced that the No Tax Due Report (Form 05-163) will be discontinued for the 2024 report year and beyond. This means that some businesses will no longer have to file this form, while others will have to file a different form instead.

The No Tax Due Report was previously required for taxable entities whose annualized total revenue was at or below the no tax due revenue threshold, which was $1.18 million for the 2023 report year. The report was also required for new veteran-owned businesses during their initial five-year exemption period.

However, starting from the 2024 report year, the no tax due revenue threshold will be increased to $2.47 million, and the Comptroller’s office will not require any taxable entities whose revenue falls below this threshold to file a No Tax Due Report. Instead, these entities will only have to file a Public Information Report (PIR) or an Ownership Information Report (OIR), depending on their entity type.

Additionally, new veteran-owned businesses will not have to file any franchise tax report, including a PIR or an OIR, during their initial five-year exemption period.

Note that entities that qualify as passive entities will still have to file a franchise tax report, either the long form or the EZ Computation form. However, they will not have to provide any information other than their taxpayer information and their passive status.

These changes are intended to simplify the franchise tax filing process and reduce the administrative burden for small businesses and veteran-owned businesses in Texas.

If you have any questions about how these changes affect your business, contact the J Rosio Tax team.