Key figures
Texas advisory
2026, with sources
The new R&D credit
SB 2206 replaced the old franchise tax research credit and the sales tax exemption for research equipment with a single credit under Subchapter T of Chapter 171, effective January 1, 2026. It starts from qualified research expenses on line 48 of the federal Form 6765, limited to research done in Texas, so a company that never filed Form 6765 has nothing to claim. The credit is 8.722% of current Texas QREs above half the prior three periods’ average.
The credit is capped at 50% of franchise tax due and carries forward for 20 reports, and an entity under the no-tax-due threshold can take it as a refund instead. That last part is new and is the piece most relevant to an early-stage team doing its engineering in Austin or Dallas.
Where founders go wrong
Texas is simple for payroll and hard on the franchise and sales tax calendar. A remote employee in Texas costs a state UI account and not much else, but a Texas customer base can create sales tax and franchise tax obligations long before anyone moves there.
- Assuming “no income tax” means no filing: every taxable entity files a franchise report or Public Information Report each May 15.
- Missing the report: the Comptroller can forfeit the right to transact business in Texas.
- Treating SaaS as untaxed: Texas taxes it as a data processing service, on 80% of the charge.
- Leaving workers’ compensation as an accident: opting out is legal, but it has notice requirements.
The federal baseline
This page covers what Texas adds. The federal rules underneath it apply here too.
Common questions
We’re pre-revenue. Can the Texas R&D credit pay us?
Possibly. From 2026 the Subchapter T credit is refundable to a company that owes no franchise tax because its annualized revenue is at or below the no-tax-due threshold or its tax is under $1,000, or because it is a qualified new veteran-owned business. A company using the EZ computation can’t take the refund. The company must have filed IRS Form 6765 for the year, and the Comptroller wants a copy with the refund claim.
Does Texas follow QSBS?
No personal income tax means no state tax on the gain either way, so qualified small business stock (QSBS) is a federal question for founders who live in Texas. It matters again the moment a founder moves to a state that taxes capital gains.
Advisory next door
- NMNew Mexico advisoryNew Mexico’s R&D credit can offset gross receipts and withholding tax and is partly refundable to small businesses. Combined-report elections lock in for seven years.
- OKOklahoma advisoryOklahoma’s incentives are targeted programs rather than a broad R&D credit, and its three-factor formula makes office location a corporate tax decision.
- ARArkansas advisoryArkansas incentives are application-based through AEDC. Ten-year NOLs and no bonus depreciation make Arkansas losses something to model, not assume.
- LALouisiana advisoryLouisiana’s R&D credit is worth up to 30% of in-state research spending above a base amount, but LED certifies it first and claims share a $12 million statewide cap each fiscal year. The 2025 reform is the backdrop for every other decision.
Founder guides on this
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
- Sales taxSales tax nexus for startups: when you owe tax in a stateSince Wayfair, selling into a state can create a sales tax obligation. How economic nexus works, why SaaS is taxable in some states and when to register.
More of the Texas guide
- AccountingAccounting and state tax in TexasCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in TexasSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in TexasPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in TexasWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in TexasRegistering to do business, annual reports, franchise tax and the filing calendar
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.