What Form 05-158 Is For
Form 05-158, officially known as the Texas Franchise Tax Report (Long Form), is the primary tax document that certain businesses must file with the Texas Comptroller of Public Accounts to fulfill their franchise tax obligations. The Texas franchise tax is a privilege tax imposed on taxable entities that are either formed in Texas or conducting business within the state. Unlike income taxes in other states, this is not a tax on net income but rather on a company's taxable margin—essentially a measure of business activity and economic presence in Texas.
The Long Form (which consists of two pages, 05-158-A and 05-158-B) is used by entities that don't qualify for the simpler EZ Computation form or that choose to use the more detailed calculation methods available on the Long Form. For report year 2025, businesses with annualized total revenue above $2.47 million generally must file this form unless they qualify for specific exemptions. The form calculates tax liability by determining a company's margin using one of several methods: total revenue times 70 percent, total revenue minus cost of goods sold, total revenue minus compensation, or total revenue minus $1 million. After calculating the margin, it's apportioned to Texas based on where revenues were earned, then multiplied by the applicable tax rate—either 0.375 percent for retail and wholesale businesses or 0.75 percent for other business types.
Businesses required to file Form 05-158 include corporations, limited liability companies (including single-member LLCs), partnerships (general, limited, and limited liability), banks, professional associations, trusts, joint ventures, S corporations, and various other legal entities. Sole proprietorships without LLC structure and general partnerships composed entirely of natural persons are generally exempt. Additionally, entities with annualized total revenue of $2.47 million or less for 2025 are not required to file Form 05-158, though they must still file a Public Information Report or Ownership Information Report.
When You’d Use Form 05-158
Standard Filing Requirements
The standard annual Form 05-158 is due May 15 each year. If May 15 falls on a weekend or legal holiday, the due date shifts to the next business day. The report covers your entity's accounting period that ended in the previous calendar year. For example, a company with a December 31 year-end filing in May 2025 would report data from the January 1 through December 31, 2024 period.
You would file Form 05-158 as an annual report if your entity's annualized total revenue exceeds the no tax due threshold ($2.47 million for 2025), if you're a passive entity as defined in Texas Tax Code Section 171.0003, if you're a Real Estate Investment Trust meeting specific qualifications, or if you have zero Texas gross receipts but total revenue above the threshold. Even if your calculated tax liability is less than $1,000, you still must file the form—you just won't owe any actual tax payment.
Late Filing Rules
For late filings, Texas imposes strict penalties. A $50 penalty applies to every franchise tax report filed after the due date, regardless of whether any tax is actually due. If you owe tax and pay it one to 30 days late, an additional five percent penalty is assessed on the tax amount. If payment comes more than 30 days late, the penalty increases to 10 percent. Interest charges begin accruing 61 days after the due date on any unpaid tax balance.
Amended Reports
Amended reports may be filed to correct mathematical or other errors, to support a claim for refund, to change the method of computing margin, or to elect to use the cost of goods sold or compensation deduction if you didn't originally claim them. Entities that initially filed using the EZ Computation or (for prior years) the No Tax Due Report can amend to the Long Form and elect deductions. An amended report that reduces your tax liability functions as a refund request and must meet all refund requirements established by the Comptroller.
Final Reports
Final reports using Form 05-158 are required when your entity terminates, converts, merges, or ceases doing business in Texas. Texas entities ending their existence must file their final report in the same year they plan to terminate, along with any tax due. Out-of-state entities ending their Texas nexus must file a final report and pay any amounts due within 60 days of ceasing Texas business activities. The final report must be accompanied by Form 05-359 (Request for Certificate of Account Status) to officially terminate with the Texas Secretary of State.
Key Rules or Details for 2025
Revenue Threshold and Filing Requirements
Understanding the fundamental rules governing Form 05-158 is essential for compliance. The no tax due threshold for 2025 is $2.47 million in annualized total revenue. If your entity's annualized total revenue meets or falls below this threshold, you're not required to file Form 05-158, though you must still file an information report. For entities with accounting periods longer or shorter than 12 months, you must annualize total revenue by dividing it by the number of days in your accounting period, then multiplying by 365.
Tax Rates
The tax rate structure for 2025 depends on your business classification. Entities primarily engaged in retail or wholesale trade pay 0.375 percent on their taxable margin, while all other business types pay 0.75 percent. When using the EZ Computation Report instead of the Long Form, the flat rate is 0.331 percent—but entities choosing the EZ Computation cannot claim cost of goods sold, compensation deductions, or tax credits.
Deduction Rules
For the Long Form, you have multiple deduction options. The compensation deduction is capped at $450,000 per person for 2025 and includes W-2 wages, cash compensation paid to officers, directors, owners, partners and employees, and certain employee benefits. It does not include 1099 contractor payments or employer-paid payroll taxes. Cost of goods sold generally covers costs related to acquiring and producing tangible personal property and real property, though service businesses typically won't have allowable costs under this category.
Filing Methods
Filing methods depend on how much tax you paid in the previous state fiscal year (September 1 through August 31). All entities can use Webfile, the Comptroller's free online system, or work with approved electronic submission software providers. If you paid less than $10,000 in the prior fiscal year, you can also file paper forms and pay by check. Entities that paid $10,000 or more must file electronically and pay via electronic funds transfer or credit card through Webfile. Entities that paid $500,000 or more must use TEXNET, the state's dedicated electronic payment system.
Extensions
Extensions are available and tentatively granted upon timely receipt of an appropriate extension payment or request form. For most entities, you must pay either 90 percent of the current year's tax liability or 100 percent of the prior year's tax by the original May 15 due date. The standard extension moves your filing deadline to November 15. Entities required to use EFT payments may be eligible for an initial extension to August 15, followed by a second extension to November 15.
Required Information Reports
Every entity filing Form 05-158 must also file an information report. Corporations, limited liability companies, professional associations, limited partnerships, and financial institutions file Form 05-102 (Public Information Report). Associations, trusts, and most other entity types file Form 05-167 (Ownership Information Report). Passive entities are exempt from filing information reports.
Step-by-Step (High Level)
1. Gather Financial Information
The filing process for Form 05-158 follows a logical sequence. Begin by gathering your federal income tax information, as Texas franchise tax calculations start with revenue amounts reported for federal purposes. Collect your accounting records covering the applicable period, typically your last accounting year ending in the previous calendar year. You'll need detailed breakdowns of revenues by source, cost of goods sold or compensation expenses, and gross receipts information showing what portion of your business occurred in Texas versus elsewhere.
2. Determine Filing Requirement
Determine your entity's classification and eligibility. Confirm whether you're required to file Form 05-158 based on your annualized total revenue exceeding $2.47 million. Verify whether your entity type requires a Public Information Report or Ownership Information Report. Check if you're part of a combined group that must file together, as combined reporting rules apply to affiliated entities engaged in unitary business.
3. Calculate Total Revenue
Calculate your total revenue using items one through eight on Form 05-158-A. This includes gross receipts or sales, dividends, interest, rents, royalties, capital gains or losses, and other income. Subtract applicable exclusions listed in item nine, such as dividends and interest from federal obligations, certain flow-through funds, and industry-specific exclusions allowed under Texas Tax Code Section 171.1011.
4. Choose Margin Calculation Method
Choose your margin calculation method. Determine which of the four methods produces the lowest taxable margin: 70 percent of total revenue, total revenue minus cost of goods sold, total revenue minus compensation, or total revenue minus $1 million. Remember that the compensation deduction has a per-person limit of $450,000 for 2025. Calculate each option and select the most favorable.
5. Apportion to Texas
Apportion your margin to Texas. Use the single-factor apportionment formula based on gross receipts. Divide your Texas gross receipts by your total gross receipts everywhere to get your apportionment percentage. Multiply your calculated margin by this percentage to determine your apportioned taxable margin.
6. Apply Tax Rate
Apply the appropriate tax rate to your apportioned margin: 0.375 percent if your business is primarily retail or wholesale, or 0.75 percent for all other business classifications. Subtract any applicable credits you've properly established. If your final calculated tax is less than $1,000, you owe zero tax but must still file the report.
7. Complete Supporting Forms
Complete all required schedules and supporting forms. If you're claiming credits, complete Form 05-160 (Credits Summary Schedule) and any specific credit documentation required. Combined groups must file Form 05-166 (Affiliate Schedule). Entities using tiered partnership provisions must complete Form 05-175.
8. File and Submit Payment
File your report electronically through Webfile or an approved provider if you meet electronic filing requirements. Submit your payment if tax is due, using the appropriate method based on your prior year's tax liability. If filing paper forms, mail them to Texas Comptroller of Public Accounts, P.O. Box 149348, Austin, TX 78714-9348. Ensure your filing is submitted or postmarked by the May 15 deadline to avoid late penalties.
9. File Information Report
Finally, file your required information report (Form 05-102 or 05-167) along with your franchise tax report. Keep copies of all filed documents and payment confirmations for your records.
Common Mistakes and How to Avoid Them
Incomplete Reports
One of the most frequent errors involves filing incomplete reports. Form 05-158 consists of two pages (05-158-A and 05-158-B), and both pages must be submitted together.
Incorrect Information Reports
Missing or incorrect information reports create another common compliance problem.
Annualization Errors
Annualization errors occur when entities with accounting periods other than 12 months fail to properly calculate annualized total revenue.
Apportionment Mistakes
Apportionment mistakes happen when businesses incorrectly calculate their Texas gross receipts percentage.
Combined Group Errors
Combined group reporting errors are particularly common.
Deadline Confusion
Timing and deadline confusion causes penalties even when no tax is owed.
What Happens After You File
Processing and Confirmation
After you submit Form 05-158, the Texas Comptroller's office processes your report and posts it to your franchise tax account.
Notices and Corrections
When problems exist with your filing, the Comptroller sends a notice explaining the specific issues.
Account Status and Compliance
If your report is accepted and complete, the Comptroller updates your account status to show current compliance.
Consequences of Noncompliance
If your franchise tax account becomes delinquent and remains unresolved, serious consequences follow.
Audits and Recordkeeping
For audits and reviews, the Comptroller may request additional documentation.
FAQs
If my annualized total revenue is less than $2.47 million but my calculated tax is more than $1,000, do I owe the tax?
No. For reports due in 2025, entities with annualized total revenue at or below the $2.47 million no tax due threshold owe no franchise tax, regardless of what a calculation might show. You're not required to file Form 05-158 at all. However, you must still file either a Public Information Report (Form 05-102) or Ownership Information Report (Form 05-167).
Can I file an amended franchise tax report, and if so, when would I need to?
Yes, amended reports are permitted for several reasons. You can amend to correct mathematical errors, support a refund claim, change your margin calculation method, or elect deductions.
What's the difference between the EZ Computation Report and the Long Form?
The EZ Computation (Form 05-169) is a simplified report available to entities with annualized total revenue of $20 million or less.
When is my first report due if I just started business?
Entities first becoming subject to franchise tax file their first annual report on May 15 of the year following the year they became taxable.
What are the requirements for combined groups?
Combined groups must file a single combined franchise tax report and include all affiliated entities engaged in unitary business.
What happens if I file late?
A $50 penalty automatically applies to late filings, with additional penalties and interest depending on how late the payment is.
What if my business is closing?
Terminating entities must file a final report, pay all liabilities, and submit Form 05-359 to obtain a Certificate of Account Status.
