Texas LLC Taxes (2026): No State Income Tax, SE Tax & S-Corp Guide

Q: Does a Texas LLC pay state income tax?

No. Texas has no personal income tax, so pass-through profits aren't taxed at the state level. The LLC still files the entity-level franchise tax report (usually $0 under $2.65M) and collects sales tax if it sells taxable goods, but there's no Texas income tax on earnings.

Q: How is a single-member Texas LLC taxed?

By default it's a disregarded entity: you report profit and loss on Schedule C with your personal Form 1040. The profit is subject to federal income tax and 15.3% self-employment tax. There's no separate federal business return and no Texas income tax.

Q: What is self-employment tax for an LLC?

It's a 15.3% tax (12.4% Social Security plus 2.9% Medicare) on active net earnings, applied to 92.35% of net profit. The Social Security portion stops at the $184,500 wage base for 2026; Medicare has no cap. You can deduct half of it on your income tax return.

Q: Should my Texas LLC elect S-corp status?

Possibly, once consistently profitable. An S-corp election (Form 2553) lets you take part of your profit as distributions that avoid the 15.3% SE tax after paying a reasonable salary. It typically makes sense above roughly $50,000-$80,000 in net profit because it adds payroll and accounting costs. Consult a CPA first.

Q: Do I pay quarterly taxes as a Texas LLC owner?

Usually. If you'll owe $1,000 or more in federal tax, the IRS expects quarterly estimated payments via Form 1040-ES, generally due April 15, June 15, September 15, and January 15. Setting aside 25-30% of profit keeps you covered. Texas has no state estimated income tax.

Q: How much should I set aside for taxes?

A common rule of thumb is 25-30% of net profit, covering federal income tax plus self-employment tax for most small LLC owners. Your exact rate depends on total income and bracket. Keep that money in a separate account for quarterly payments.

Q: Is an LLC or S-corp better for taxes in Texas?

An S-corp is a tax election your LLC can make, not a separate entity. Keep default LLC taxation while profits are modest. Once profit is high enough that SE-tax savings outweigh payroll and accounting costs, electing S-corp status can lower your tax. With no Texas income tax, the decision is driven by federal self-employment tax.

How a Texas LLC Is Taxed

By default, an LLC is a pass-through entity for federal taxes: the business itself doesn't pay income tax. Instead, profits "pass through" to the owners, who report them on their personal returns. And because Texas has no personal income tax, those profits face no state income tax at all — one of the biggest advantages of running an LLC here.

Your LLC does have other Texas obligations from earlier steps: the annual franchise tax report and PIR (Step 6), and sales tax if you sell taxable goods (Step 7). This step focuses on the federal side.

Federal Income Tax by Structure

Single-Member LLC

Treated as a "disregarded entity." You report business profit/loss on Schedule C attached to your personal Form 1040. No separate business return.

Schedule C (Form 1040)

Multi-Member LLC

Treated as a partnership. The LLC files an informational Form 1065 and issues each owner a Schedule K-1 showing their share, which they report personally.

Form 1065 + K-1

In both cases, the income lands on your personal 1040 and is taxed at your individual federal rate. You can also elect to be taxed as a corporation — covered below.

Texas LLC owner calculating federal and self-employment taxes with no state income tax

Self-Employment Tax (The Big One)

Here's the cost that surprises new owners. As an active LLC owner, your share of the profit is subject to self-employment tax — 15.3% covering Social Security (12.4%) and Medicare (2.9%). This is on top of income tax, and it's the price of not having an employer withhold payroll taxes for you.

SE tax applies to 92.35% of your net business earnings.
The 12.4% Social Security portion applies only up to the $184,500 wage base (2026); the 2.9% Medicare portion has no cap.
You can deduct half your SE tax on your income tax return.

Texas LLC Tax Estimator (2026)

Enter your LLC's annual net profit and filing status to estimate your federal tax — self-employment tax plus income tax — and see your $0 Texas state income tax:

Texas LLC Federal Tax Estimator

2026 rates · pass-through (Schedule C) · estimate only

Annual net business profit

Filing status

Simplified estimate for an LLC taxed as a sole proprietor/partnership. Assumes the standard deduction, the 20% QBI deduction on profit, no other household income, and no credits. Real returns vary — this is not tax advice. Confirm with a CPA.

The S-Corp Election (Save on SE Tax)

Once your LLC is consistently profitable, electing S-corporation taxation (IRS Form 2553) can cut your self-employment tax. As an S-corp, you pay yourself a reasonable salary (subject to payroll tax) and take the remaining profit as distributions that aren't hit by the 15.3% SE tax.

When the S-corp math worksThe election only pays off once profit comfortably exceeds a reasonable salary — commonly cited around $50,000–$80,000+ in net profit — because it adds payroll and bookkeeping costs. Below that, the savings rarely beat the added complexity. Run the numbers with a CPA before electing. See our LLC vs S-corp guide.

S-corp ≠ Form 8832To be taxed as an S-corp, file Form 2553. Form 8832 elects C-corp taxation, which is rarely what a small LLC wants. Don't confuse the two.

Texas State-Level Taxes

No personal income tax — Texas doesn't tax your pass-through profits at the state level.
Franchise tax — an entity-level filing, but $0 for most LLCs under the $2.65M threshold (Step 6). You still file the PIR.
Sales tax — 6.25%–8.25% if you sell taxable goods or services (Step 7).

Quarterly Estimated Taxes

Because no employer withholds tax for you, the IRS expects you to pay as you go. If you'll owe $1,000+ in federal tax, make quarterly estimated payments using Form 1040-ES, generally due April 15, June 15, September 15, and January 15. Set aside roughly 25–30% of your profit so you're never caught short.

Official IRS self-employment tax guideFor the authoritative rules on rates, who pays, and how to calculate and pay self-employment tax, see the IRS self-employment tax page.

Ahmad Adil's Take: The two moves that matter most: open a separate savings "tax bucket" and park 25–30% of every payment there so quarterly taxes never hurt, and revisit the S-corp election the year your net profit clears roughly $50K–$80K. Don't rush the S-corp — below that level the payroll and accounting costs usually eat the savings. And enjoy the Texas perk: no state income tax means more of your profit stays yours than in almost any other state.

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Frequently Asked Questions

Texas LLC Taxes — FAQ

Does a Texas LLC pay state income tax?

No. Texas has no personal income tax, so the profits that pass through your LLC to your personal return aren't taxed at the state level. Your LLC still has the entity-level franchise tax report (usually $0 under $2.65M) and sales tax if it sells taxable goods, but there's no Texas income tax on your earnings.

How is a single-member Texas LLC taxed?

By default it's a "disregarded entity": you report profit and loss on Schedule C with your personal Form 1040. The profit is subject to federal income tax and 15.3% self-employment tax. There's no separate federal business return and no Texas income tax.

What is self-employment tax for an LLC?

It's a 15.3% tax (12.4% Social Security + 2.9% Medicare) on your active net business earnings, applied to 92.35% of net profit. The Social Security portion stops at the $184,500 wage base for 2026; Medicare has no cap. You can deduct half of it on your income tax return. It replaces the payroll taxes an employer would normally split with you.

Should my Texas LLC elect S-corp status?

Possibly, once you're consistently profitable. An S-corp election (Form 2553) lets you take part of your profit as distributions that avoid the 15.3% SE tax, after paying yourself a reasonable salary. It typically makes sense above roughly $50,000–$80,000 in net profit, because it adds payroll and accounting costs. Run the numbers with a CPA first.

Do I pay quarterly taxes as a Texas LLC owner?

Usually, yes. If you'll owe $1,000 or more in federal tax for the year, the IRS expects quarterly estimated payments via Form 1040-ES, generally due April 15, June 15, September 15, and January 15. Setting aside 25–30% of your profit as you earn it keeps you covered. Texas has no state estimated income tax.

How much should I set aside for taxes?

A common rule of thumb is 25–30% of net profit, which covers federal income tax plus self-employment tax for most small LLC owners. Your exact rate depends on your total income and bracket — use the estimator above for a closer figure. Keep that money in a separate account so it's there when quarterly payments come due.

Is an LLC or S-corp better for taxes in Texas?

An "S-corp" isn't a different entity — it's a tax election your LLC can make. Keep default LLC taxation while profits are modest; the simplicity wins. Once profit is high enough that the SE-tax savings outweigh payroll and accounting costs, electing S-corp status can lower your overall tax. Because Texas has no income tax, the decision is driven entirely by federal self-employment tax.

That's all 8 steps — your Texas LLC is complete!

You've covered naming, your registered agent, the Certificate of Formation, your operating agreement, EIN, franchise tax, licenses, and taxes. Keep that May 15 franchise/PIR reminder set, and you're in great shape.

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About the Author

Ahmad Adil

Ahmad Adil is the founder and CEO of LLC School. The 2026 figures here — the $16,100/$32,200 standard deductions, $184,500 Social Security wage base, federal brackets, and 15.3% SE tax — were verified against IRS Rev. Proc. 2025-32 and IRS self-employment tax guidance. This is educational information, not individualized tax advice.

About Ahmad Adil → LLC Taxes Guide →

Texas LLC Taxes — Step 8 of 8