Austin, TX Local Taxes & Fees: Business Tax Classification (2026)
Key Facts
- Local business tax
- None
- State franchise
- TX Tax Code Ch. 171
- No-tax-due threshold
- $2.47M revenue (2026)
- Sales tax total
- 8.25 percent
- Property rendition
- Annual to TCAD
Summary
Texas does not allow municipal gross-receipts taxes, so Austin has no local business tax classification scheme; businesses owe only the Texas franchise tax through the Comptroller plus property tax on tangible personal property assessed by Travis Central Appraisal District.
What is Franchise Tax? The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. [...] Annual Franchise Tax Reports - The annual franchise tax report is due May 15. If May 15 falls on a weekend or holiday, the due date will be the next business day. [...] Tax Rates, Thresholds and Deduction Limits - 2026 and 2027: No Tax Due Threshold $2,650,000; Tax Rate (retail or wholesale) 0.375%; Tax Rate (other than retail or wholesale) 0.75%; Compensation Deduction Limit $480,000; EZ Computation Total Revenue Threshold $20 million; EZ Computation Rate 0.331%. [...] Penalties - A $50 penalty is assessed on each report filed after the due date. If tax is paid 1-30 days after the due date, a 5 percent penalty is assessed. If tax is paid over 30 days after the due date, a 10 percent penalty is assessed. Interest - Past due taxes are charged interest beginning 61 days after the due date. [...] Laws: Ch. 171, Franchise Tax; Ch. 172, Tax Credit for Certified Rehabilitation of Certified Historic Structures.
Full Breakdown
Texas constitutional and statutory limits prohibit municipal gross-receipts business taxes. Austin therefore charges no general business tax, no head tax, and no local payroll tax. State revenue comes from the Texas franchise tax under Tax Code Chapter 171, calculated on margin for entities above the no-tax-due threshold (about $2.47 million in 2026), filed annually with the Comptroller. Austin businesses also pay property tax on tangible business personal property rendered to Travis Central Appraisal District (TCAD), and sales tax of 8.25 percent (6.25 state, 1 city, 1 capital metro). Specific industries owe additional state taxes: hotel occupancy, mixed-beverage gross receipts, motor vehicle, and oil/gas. Local fees apply only to industry-specific licenses (food, alarm, taxi) rather than general business activity.
Violations & Fines
Failure to file Texas franchise tax triggers a $50 late filing penalty, 5 percent late-payment penalty, plus interest and forfeiture of right to do business under Section 171.251. Failure to render personal property to TCAD adds a 10 percent penalty.
Frequently Asked Questions
Does Austin charge a local business license tax?
What state tax does my Austin business owe?
Sources & Official References
Other rules in Austin
Texas rules heatmap·Compare Austin to another location·View the Texas local taxes & fees overview
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