A Newcomers Guide To Taxes In Texas

This article is an overview of the taxes charged to businesses and workers in the state of Texas.

If you live and/or work in Texas, then there are several tax issues that you should be aware of. First, there is no state income tax so you don't have to worry about filing a Texas State Income Tax Return by April 15th. Also if you have Retired Military Pay you won't be taxed on this amount either. However, if you do business in this state you will need to contend with Business Taxes, Employment Taxes, Sales Taxes, and Local Taxes.

BUSINESS TAXES

The Comptroller of Public Accounts handles most business tax issues and collections. Their office is located at 111 West Sixth Street in Austin, Texas 78768-4843, and can be contacted via telephone at 512-463-4600 or 1-800-252-5555. This is the office that you will need to contact in regards to collecting and submitting local and state sales tax.

The main business taxes that the state imposes are: the Franchise Tax, Sales and Use Tax, and Business Property Taxes. The Franchise Tax is based on the amount of taxable capital or taxable earned surplus that your business has. It is calculated by taking the greater of .25% per year of the privilege period or net taxable capital or 4.5% of the net taxable earned surplus. If you are required to pay this tax you will need to file a Texas Corporation Franchise Tax Report by May 15 to the Comptroller of Public Accounts in Austin, Texas. Electronic filing is not available at this time for filing the Texas Franchise Tax, however if you have questions about other filing options you can contact this tax department by dialing 1-800-252-1381.



The Sales and Use Tax is applicable to Texas sole proprietorships, partnerships, and corporations. It is based on the sale of items and is remitted to the Comptroller on a monthly basis, and it is usually due by the 20th of each month following the sales month. See SALES TAX for more information.

Business Property Taxes are used to report taxable tangible personal property used to generate income. You will need to file a rendition form between January 1 and March 31 of each year to your local county appraisal office. See LOCAL TAXES for more information.

EMPLOYMENT TAXES

If you have employees then you will need to collect, or withhold an unemployment tax. This tax needs to be submitted to the Texas Workforce Commission. For information on how to file the required reports, pay unemployment taxes, to obtain a state employer's identification number, or to request information on tax credits that you may be eligible for, you can contact their office at: Tax Department, 101 East 15th Street, Austin, Texas 78778.

LOCAL TAXES

Localities within Texas also impose business taxes of their own that you will need to be aware of. If your business has any tangible personal property that is used to generate income of any kind, then you will be charged a local property tax. You will be required to file a rendition form with your local county appraisal district between January 1 and March 31 of every year you are in business, and this report will include: inventories, equipment, machinery, land, buildings, etc.

SALES TAX

Like most other states, Texas imposes both state and local sales tax on retail goods, leases and rentals of most goods, as well as on taxable services. The state sales tax is 6.25%. Texas cities are allowed to impose additional sales taxes at their discretion, and because of this, the total sales tax imposed will vary from city to city. For those companies that sell items, you will need to periodically make tax deposits and file sales tax reports on a monthly, quarterly, or annual basis. Electronic reporting is an available option with this tax. For more information you can contact his tax department by calling 1-800-252-5555.

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