| State income tax | No state income tax |
| Pass-through entity tax election (SALT workaround) | Not available |
| 1099-K state threshold below federal $20,000 | Federal floor only |
| Sales tax economic nexus | $500,000 (sales only) |
This state imposes no broad personal income tax on wages or pass-through business income. Other state-level taxes (sales, property, franchise/gross-receipts where applicable) still apply. The absence of a state income tax substantially changes the value of federal-only tax planning moves (S-Corp election, retirement-plan stacking, QBI optimization), because there's no state piggyback to compound the federal benefit.
This state does not currently offer a Pass-Through Entity (PTE) tax election under the post-TCJA state workaround framework. Texas has no personal income tax on pass-through business income, so there is no state income tax for a PTE election to convert into a federal business deduction. Texas instead imposes its franchise (margin) tax at the entity level on LLCs, partnerships and S-Corps whose total revenue exceeds the no-tax-due threshold ($2.65 million for 2026 and 2027 reports).
This state has not enacted a 1099-K reporting threshold lower than the federal floor. The IRS applies the federal threshold ($20,000 in gross payments AND more than 200 transactions through a third-party settlement organization, as restored by the One Big Beautiful Bill Act, P.L. 119-21, retroactive to 2022). Sellers under that floor will not receive a 1099-K from platforms like PayPal, Venmo Business, eBay, Etsy, or Stripe. Note: receipt of a 1099-K does not change the underlying tax obligation; all business income is reportable regardless of whether a 1099-K is issued.
The state adopted economic-nexus rules following South Dakota v. Wayfair (2018). Remote sellers without physical presence trigger sales-tax collection obligations once they exceed the state's annual gross-receipts or transaction-count threshold, applied to prior or current calendar year. Marketplace facilitators (Amazon, eBay, Etsy, Walmart) collect on behalf of third-party sellers under separate marketplace laws.
Texas uses a $500,000 safe harbor: a remote seller whose total Texas revenue in the preceding twelve calendar months is below $500,000 does not need a permit or to collect Texas use tax. There is no transaction-count test (Texas Comptroller of Public Accounts, as of October 2026).
Texas LLC formation: $300 Certificate of Formation filing fee. No annual report fee per se; however, all Texas LLCs must file an annual Public Information Report (PIR) and (above the no-tax-due threshold) a Franchise Tax Report. Many small LLCs fall below the no-tax-due threshold ($2.65 million for 2026 and 2027 reports; it was $2.47 million for 2024 and 2025) and owe $0 in franchise tax but must still file the PIR by May 15 each year.
Texas has no personal income tax, so there are no state individual estimated-tax payments and no state safe harbor to meet. A freelancer's quarterly estimates are federal only (IRS Form 1040-ES, due April 15, June 15 and September 15, 2026 and January 15, 2027). Texas franchise tax is an annual report due May 15, not a quarterly estimate.
Once the threshold facts are clear, the next question is what they mean for your specific income mix. Use the S-Corp Election Calculator to test whether the salary/distribution split clears the federal break-even given Texas rates, the Income Tax Pipeline to model federal + Texas liabilities together, and the Reseller Profit Calculator for 1099-K-affected resale operations.
No. Texas has not enacted a 1099-K reporting threshold lower than the federal floor. Sellers will receive a 1099-K only if they exceed the federal threshold (the restored federal $20,000 and 200-transaction floor applies). All business income remains reportable on the federal and state return regardless of whether a 1099-K is issued.
No. Texas does not currently offer a Pass-Through Entity tax election. Texas pass-through owners cannot use a PTE election to convert state income tax into a federal business deduction beyond the federal SALT cap ($40,400 for 2026). Other federal-only planning levers (retirement-plan contributions, QBI optimization, accountable-plan reimbursements) remain available.
Remote sellers without physical presence in Texas must register and collect Texas sales tax once they exceed the state's annual threshold: $500,000 in total Texas revenue in the preceding twelve calendar months (Texas has no transaction-count test). Marketplace facilitators (Amazon, eBay, Etsy, Walmart) collect on behalf of third-party sellers under separate marketplace laws. Verify the current threshold structure against the Texas Comptroller of Public Accounts.
Texas LLCs must file PIR by May 15 annually; franchise tax owed only above the no-tax-due revenue threshold ($2.65M for 2026 and 2027 reports).
What a seller may claim, must disclose, and owes in tax is set by published federal rules rather than by any marketplace's seller handbook, and the sources below are the primary ones. They are linked so a reader can check a claim here without taking this page's word for it.
This page describes tools and the rules that apply to using them. A seller's own structure, state and marketplace agreements decide what applies to them.