Texas: what each business structure costs a year

At $100,000 profit, an LLC taxed as an S corp costs $4,536 a year less than a sole proprietorship in Texas. All figures are 2026 tax and fees.

$4,536 a year

less as an LLC taxed as an S corp than as a sole proprietorship in Texas, at these numbers.

Texas, 2026: $100,000 profit, single filer

Structure

Yearly cost

vs yours

To set up

Sole proprietorship yours

$22,365

Itemized: $22,365

Self-employment taxirs.gov, 2026 rates	$14,130
Federal income taxirs.gov, 2026 rates	$8,235
Yearly cost	$22,365

Single-member LLC

$22,365

+$0

$300

Itemized: $22,365

Self-employment taxirs.gov, 2026 rates	$14,130
Federal income taxirs.gov, 2026 rates	$8,235
Yearly cost	$22,365

LLC taxed as an S corp lowest

$17,829

−$4,536

$300

Itemized: $17,829

Payroll tax on your salaryirs.gov, 2026 rates	$6,405
Payroll service and tax return (estimate)	$1,800
Federal income taxirs.gov, 2026 rates	$9,624
Yearly cost	$17,829

S corporation

$17,829

−$4,536

$300

Itemized: $17,829

Payroll tax on your salaryirs.gov, 2026 rates	$6,405
Payroll service and tax return (estimate)	$1,800
Federal income taxirs.gov, 2026 rates	$9,624
Yearly cost	$17,829

C corporation

$25,147

+$2,782

$300

Itemized: $25,147

Payroll tax on your salaryirs.gov, 2026 rates	$6,405
Payroll service and tax return (estimate)	$2,000
Federal corporate income tax (21%)irs.gov, 2026 rates	$11,478
Federal income taxirs.gov, 2026 rates	$5,264
Yearly cost	$25,147

What these figures count

State income tax, and state taxes on the business itself: franchise, LLC, S corp, gross receipts and excise taxes.
Social Security and Medicare on both sides of an owner salary, federal unemployment tax and the state's new-employer rate.
The 20% qualified business income deduction with its income limits and the professional-service rule.
Yearly report fees, and a cost you can change for payroll and the business tax return.

Many S corp calculators leave out state taxes and the QBI deduction, which can make the election look better than it is.

When an S corp election pays in Texas

Electing S corp tax treatment for an LLC starts to pay in Texas at about $50,000 of profit, with the default salary and $1,800 a year for payroll and the extra tax return.

Profit	Sole prop	LLC	LLC as S corp	C corp
$30,000	$5,181	$5,181	$6,713	$7,142
$50,000	$9,732	$9,732	$9,595	$11,533
$75,000	$15,495	$15,495	$11,995	$16,783
$100,000	$22,365	$22,365	$17,829	$25,147
$150,000	$37,607	$37,607	$30,397	$42,959
$200,000	$53,430	$53,430	$43,724	$59,954
$300,000	$92,125	$92,125	$73,345	$95,598

Single filer, no other income, revenue taken as 1.5 times profit, default salary. The lowest cost in each row is marked.

State fees and taxes in Texas

	LLC	Corporation
Filing to form	$300Certificate of Formation (Form 205)	$300Certificate of Formation for-profit corporation (Form 201)	sos.state.tx.us
Yearly report	Franchise Tax Public Information Report, no fee	Franchise Tax Public Information Report, no fee	comptroller.texas.gov
Report due	May 15	May 15
Texas franchise (margin) tax0.75% of gross receipts × 0.7, none up to $2,650,000	yes	yes	comptroller.texas.gov

Texas has no personal income tax on wages or business income. comptroller.texas.gov
Texas has no corporate income tax. comptroller.texas.gov
Texas follows the federal S corp election.
New employers pay state unemployment tax of 2.7% on the first $9,000 of each employee's wages. That applies to an owner's salary from an S or C corp. twc.texas.gov
No Secretary of State annual report. The Public Information Report is filed with the Comptroller with the franchise tax report and has no fee.
No Secretary of State annual report. The Public Information Report is filed with the Comptroller and has no fee.

Not in the calculator: No local income taxes. Counties, cities and school districts levy property tax on business personal property (inventory, equipment) above a small exemption.

Switching calculators for Texas

By profession in Texas

Questions

Is an S corp worth it in Texas?

On these figures, from about $50,000 of profit. At $100,000 an LLC taxed as an S corp costs $17,829 a year against $22,365 for a plain LLC, $4,536 less. The saving comes from paying Social Security and Medicare tax on a salary instead of on all profit.

How much does an LLC cost per year in Texas?

The state charges Franchise Tax Public Information Report, no fee. LLCs can also owe Texas franchise (margin) tax. Forming one costs $300.

Does Texas recognise the S corp election?

Yes. The federal election carries over with no separate state form. No state income tax, so the S election has no state income tax effect. S corps owe franchise tax the same as C corps.

What income tax does Texas charge?

Texas has no personal income tax on wages or business income. Texas has no corporate income tax.

How this page models Texas (1)

TWC's tax-rates page gives the 2026 entry-level rate as 2.70% for all industry groups and the $9,000 wage base, and lists the Employment and Training Investment Assessment (ETIA) as one of the five components of the effective tax rate.

Sources checked 2026-10-23. Each figure links to the state or IRS page it comes from.

Other states

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When an S corp election pays in Texas

State fees and taxes in Texas

Switching calculators for Texas

By profession in Texas

Questions

Is an S corp worth it in Texas?

How much does an LLC cost per year in Texas?

Does Texas recognise the S corp election?

What income tax does Texas charge?