What the Form Is For
Texas Form 05-169, officially titled the "Texas Franchise Tax EZ Computation Report," is a simplified tax report that certain Texas businesses use to calculate and pay their annual franchise tax. The franchise tax is a privilege tax—meaning it's the price of doing business in Texas—charged to entities that are either formed in Texas or conducting business within the state. Texas Comptroller
This streamlined form offers an alternative to the more complex Long Form (Form 05-158) by using a single, straightforward calculation method. Instead of choosing between multiple deduction methods—such as cost of goods sold or compensation—businesses using Form 05-169 simply multiply their total revenue by an apportionment factor and then apply a fixed tax rate of 0.331 percent. The trade-off for this simplicity is that you cannot claim the various deductions or credits available on the Long Form. Texas Comptroller
For report year 2025, your business qualifies to use Form 05-169 if your annualized total revenue is $20 million or less. Additionally, beginning with reports due in 2024 and continuing through 2025, certain specialized entities—including passive entities as defined in Texas Tax Code Section 171.0003, Real Estate Investment Trusts (REITs) meeting specific qualifications, and entities with zero Texas gross receipts—must also file either the EZ Computation or Long Form to document their status, even though they may owe no tax. Texas Comptroller
When You’d Use the Form
Late Filing
The standard annual franchise tax report, including Form 05-169, is due May 15 each year. If May 15 falls on a weekend or legal holiday, the due date automatically shifts to the next business day. This report covers the accounting period that ended during the previous calendar year—typically the last day of your federal accounting year in that prior year. Texas Comptroller
If you miss the May 15 deadline, you should file Form 05-169 as soon as possible. Texas law imposes an automatic $50 late filing penalty on every franchise tax report filed after the due date, regardless of whether you owe any tax. If tax is owed, additional penalties apply: 5 percent if you pay 1-30 days late, and 10 percent if you pay more than 30 days late. Interest also begins accruing on unpaid taxes starting 61 days after the original due date. Texas Comptroller
Extensions
You can request an extension of time to file, which moves your deadline to August 15 or November 15, depending on your entity's payment history and whether you're required to pay by Electronic Funds Transfer (EFT). To receive a valid extension, you must submit your request or payment on or before the original May 15 due date. Generally, the extension payment must equal either 100 percent of the tax you paid on your prior year's report or 90 percent of the tax you'll owe on the current year's report. Texas Comptroller
Amended Reports
You may file an amended Form 05-169 to correct mathematical errors, support a refund claim, or switch calculation methods. Notably, if you originally filed the EZ Computation and later realize you'd owe less tax using the Long Form with deductions, you can amend to the Long Form and claim the cost of goods sold or compensation deduction. However, if your amendment reduces your tax liability, it's treated as a refund request and must meet the state's refund requirements. Texas Comptroller
Final Reports
When your business ends its Texas existence or ceases doing business in Texas, you must file a final report. For Texas entities, this means filing in the year you terminate, merge, or convert. For out-of-state entities, you have 60 days after ending your nexus with Texas to file and pay any tax due. Write "FINAL" at the top of Form 05-169 and include a request for a Certificate of Account Status if you're terminating with the Texas Secretary of State. Texas Comptroller
Key Rules or Details for 2025
Eligibility Threshold
Your business can elect to file Form 05-169 only if your annualized total revenue is $20 million or less for report year 2025. If your accounting period is shorter or longer than 12 months, you must annualize your revenue by dividing total revenue by the number of days in your accounting period and then multiplying by 365. Texas Comptroller
No Tax Due Threshold
For 2025 reports, if your annualized total revenue is $2,470,000 or less, you owe no franchise tax and are no longer required to file any franchise tax report. However, you must still file an information report—either the Public Information Report (Form 05-102) or the Ownership Information Report (Form 05-167)—depending on your entity type. Texas Comptroller
Tax Calculation Method
The EZ Computation uses a simplified formula. You calculate your total revenue (as reported for federal income tax, minus statutory exclusions), multiply it by your apportionment factor (Texas gross receipts divided by gross receipts everywhere), and then multiply that apportioned revenue by 0.331 percent. This single rate replaces the two-tiered system used on the Long Form, where retail/wholesale businesses pay 0.375 percent and other businesses pay 0.75 percent on their margin. Texas Comptroller
No Deductions or Credits
By choosing Form 05-169, you give up the right to deduct cost of goods sold, compensation expenses, or the $1 million standard deduction available on the Long Form. You also cannot claim any franchise tax credits, such as research and development credits or historic structure rehabilitation credits. This trade-off makes the EZ Computation beneficial mainly for businesses with low margins or those that wouldn't benefit significantly from deductions. Texas Comptroller
Minimum Tax
If your calculated tax is less than $1,000, you file the report but owe no tax payment. Even though no payment is due, you must still submit Form 05-169 and the appropriate information report to satisfy your filing requirements. Texas Comptroller
Information Reports Required
Nearly all entities filing Form 05-169 must also submit either a Public Information Report or Ownership Information Report. Corporations, LLCs, professional associations, limited partnerships, and financial institutions file the Public Information Report. Associations, trusts, and most other entity types file the Ownership Information Report. These reports provide transparency about your business structure and ownership. Texas Comptroller
Step-by-Step (High Level)
Step 1: Determine Your Accounting Period
Identify the beginning and ending dates for your accounting year. For annual reports, the end date is typically your last federal accounting period end date in the calendar year before the report is due. New entities use the date they became subject to franchise tax as their begin date. Texas Comptroller
Step 2: Calculate Total Revenue
Add up all revenue categories from your federal income tax records: gross receipts or sales, dividends, interest, rents, royalties, gains or losses, and other income. Then subtract any statutory exclusions allowed under Texas Tax Code Section 171.1011, such as dividends from federal obligations or certain flow-through funds. Texas Comptroller
Step 3: Annualize Revenue if Needed
If your accounting period isn't exactly 12 months, annualize your total revenue by dividing it by the number of days in the period and multiplying by 365. This annualized figure determines whether you qualify for the EZ Computation and whether you exceed the no tax due threshold. Texas Comptroller
Step 4: Calculate Your Apportionment Factor
Divide your Texas gross receipts by your gross receipts everywhere. This ratio determines what portion of your business activity occurred in Texas. If you operate entirely within Texas, your apportionment factor will be 1.0 (or 100 percent). Texas Comptroller
Step 5: Apply the EZ Computation Formula
Multiply your total revenue by your apportionment factor to get your apportioned total revenue. Then multiply that result by 0.331 percent (or 0.00331 as a decimal) to calculate your franchise tax due. Texas Comptroller
Step 6: Determine Payment Amount
If your calculated tax is $1,000 or more, you must pay the full amount. If it's less than $1,000, you file the report without payment. Do not send a check if your tax due is under $1,000 or if your annualized total revenue is below the no tax due threshold. Texas Comptroller
Step 7: Complete and File the Form
Fill out Form 05-169 with your taxpayer information, accounting dates, revenue details, and calculated tax. You can file online using Webfile or submit a paper form. Include the appropriate information report and any payment required. The deadline is May 15, or the next business day if May 15 falls on a weekend or holiday. Texas Comptroller
Common Mistakes and How to Avoid Them
Mistake 1: Filing When You Don't Need To
If your annualized total revenue is $2,470,000 or less for report year 2025, you don't need to file Form 05-169 at all—you only need to file an information report. Many businesses waste time filing unnecessary franchise tax reports because they don't realize the no tax due threshold eliminates the requirement. Check your annualized revenue carefully before preparing Form 05-169. Texas Comptroller
Mistake 2: Choosing EZ When Long Form Would Save Money
The EZ Computation's simplicity appeals to many businesses, but it's not always the cheapest option. If you have significant cost of goods sold or substantial employee compensation, the Long Form's deductions might result in lower tax. Before committing to Form 05-169, run the numbers both ways—or consult a tax professional—to determine which method minimizes your liability. Remember, you can amend later, but it's easier to get it right the first time. Texas Comptroller
Mistake 3: Forgetting to Annualize Revenue
Businesses with accounting periods shorter or longer than 12 months often report their actual revenue instead of annualizing it. This error can incorrectly disqualify you from using the EZ Computation or falsely suggest you fall under the no tax due threshold. Always convert revenue to an annual basis using the formula: (Total Revenue ÷ Days in Period) × 365. Texas Comptroller
Mistake 4: Missing the Information Report
Form 05-169 must be accompanied by either a Public Information Report or Ownership Information Report, depending on your entity type. Many businesses file the tax report but forget the information report, which triggers notices from the Comptroller's office and can result in administrative headaches. Make sure you know which information report applies to your entity and file both documents together. Texas Comptroller
Mistake 5: Paying When Tax Due Is Under $1,000
The form instructions clearly state not to include payment if your calculated tax is less than $1,000. Yet some businesses send checks anyway, creating unnecessary processing complications. If your tax due falls below this threshold, simply file the report with no payment and move on. Texas Comptroller
Mistake 6: Using the Wrong Accounting Dates
First-year businesses often struggle with determining the correct accounting period. If you became subject to franchise tax during the previous calendar year and your normal federal year-end falls before the date you became subject to tax, you must use a one-day accounting period (begin and end on the same date) for your first annual report, resulting in a zero return. Getting the dates wrong can invalidate your entire report. Texas Comptroller
Mistake 7: Ignoring Special Entity Rules
Beginning in 2024, passive entities, REITs, and entities with zero Texas gross receipts have special reporting requirements. These entities must file Form 05-169 or the Long Form to document their status, but they may only need to complete certain sections and darken specific circles on the form. Failing to follow these special rules can result in processing delays and follow-up notices. Texas Comptroller
What Happens After You File
Immediate Processing
Once you file Form 05-169, the Texas Comptroller's office processes your report and updates your franchise tax account. If you filed online through Webfile, you typically receive immediate confirmation. Paper filers should allow several weeks for processing. You can check your account status online using the Comptroller's "Look Up Account Status" tool by entering your 11-digit taxpayer number. Texas Comptroller
Account Status and Compliance
After processing, your entity receives "good standing" status with the state, meaning you're current on franchise tax obligations. This status matters because you need a Certificate of Account Status from the Comptroller to make certain changes with the Texas Secretary of State, such as terminating your entity, converting to another entity type, or merging with another business. Maintaining good standing also helps avoid administrative holds on your business. Texas Comptroller
Notices and Corrections
If the Comptroller identifies issues with your return—such as missing information, mathematical errors, or inconsistencies—you'll receive a notice explaining the problem and requesting clarification or correction. Common notices include requests for missing information reports, affiliate schedules for combined groups, or explanations of discrepancies between reported figures. Respond promptly to these notices to avoid penalties and keep your account current. Texas Comptroller
Next Year's Planning
Filing Form 05-169 doesn't lock you into using the EZ Computation forever. Each year, as you prepare your franchise tax report, evaluate whether the EZ Computation still makes sense or whether switching to the Long Form would save money. Your business circumstances change—you might hire more employees, increase inventory, or grow beyond the $20 million revenue threshold—so reassess your strategy annually. Texas Comptroller
Audits and Verification
Like any tax report, Form 05-169 may be selected for audit or review by the Comptroller's office. Texas conducts these reviews to verify accuracy and ensure compliance with franchise tax law. If selected, you'll need to provide supporting documentation such as federal tax returns, financial statements, and revenue records. Maintain organized records for at least four years after filing to facilitate any potential audit. Texas Comptroller
FAQs
Can combined groups use the EZ Computation?
Yes, combined groups are eligible to file Form 05-169 if their combined annualized total revenue is $20 million or less. However, all members of the combined group must use the same calculation method—you cannot have some members using the EZ Computation while others use the Long Form with deductions. The simplified calculation applies to the entire combined group's apportioned revenue. Texas Comptroller
What if my revenue is exactly $20 million—can I still use Form 05-169?
The eligibility rule states "annualized total revenue of $20 million or less," so yes, if your annualized revenue equals exactly $20 million, you qualify for the EZ Computation. Only businesses exceeding $20 million in annualized total revenue must use the Long Form. Texas Comptroller
Do I need to file anything if my annualized revenue is below the $2,470,000 no tax due threshold?
For report year 2025, entities with annualized total revenue at or below $2,470,000 do not file a franchise tax report. However, you must still file an information report—either Form 05-102 (Public Information Report) or Form 05-167 (Ownership Information Report)—each year to maintain your entity's registration and good standing with the state. Texas Comptroller
How do I switch from the EZ Computation to the Long Form next year?
There's no special procedure required. When preparing your next franchise tax report, simply file Form 05-158 (Long Form) instead of Form 05-169. You're free to choose the calculation method that works best for your business each year, as long as you meet the eligibility requirements for your chosen method. You're not locked into continuing with the EZ Computation. Texas Comptroller
Can I deduct anything using the EZ Computation?
No. The EZ Computation's simplified formula does not allow for any deductions—not cost of goods sold, compensation, or the standard $1 million deduction. You also cannot claim any franchise tax credits such as research and development credits. The trade-off for this simpler calculation is giving up these deductions and credits. If deductions would substantially reduce your tax liability, consider using the Long Form instead. Texas Comptroller
What happens if I discover an error after filing?
You can file an amended Form 05-169 to correct the mistake. Amended reports are appropriate for mathematical errors, incorrect revenue figures, or other factual corrections. If your amendment results in additional tax owed, file and pay the difference as soon as possible to minimize penalties and interest. If your amendment shows you overpaid, it becomes a refund request subject to the state's refund procedures and time limits. Texas Comptroller
Does filing Form 05-169 satisfy my requirements if I'm closing my business?
If you're closing your business, you'll need to file a final franchise tax report in addition to your annual report (if both are required based on your closure timing). Mark the report "FINAL" and include the date your business ceased operations or ended nexus with Texas. You'll also need Form 05-359 (Request for Certificate of Account Status) to officially terminate your entity's existence with the Texas Secretary of State. Filing your final reports properly ensures you don't continue receiving franchise tax obligations after your business has closed. Texas Comptroller
