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Texas Corporate Tax refers to the state-level taxation imposed on businesses operating within Texas, primarily through the Texas Franchise Tax. This tax is levied on a taxable entity's 'margin' rather than its net income, making it distinct from traditional corporate income taxes.
The Texas Franchise Tax is calculated based on a taxable entity's margin, which can be determined using several methods: total revenue minus cost of goods sold (COGS), total revenue minus compensation, total revenue times 70%, or total revenue minus $1 million (effective 2024). The current tax rate for most businesses is 0.331% of margin for retail and wholesale businesses and 0.775% for all other businesses. The no-tax-due threshold is $1.28 million in total revenue for reports due in 2024. Reports are filed with the Texas Comptroller of Public Accounts.