Key takeaways
- The federal Form 1120-S for tax year 2026 is due March 15, 2027, and the Texas franchise filing is due May 17, 2027.
- Every S corporation files something with the Comptroller each year, even when it owes no tax.
- At or below $2,650,000 of annualized total revenue, the client files a Public Information Report on Form 05-102 and no tax report.
- A Texas extension holds only if the client pays 90% of the current tax or 100% of the prior tax by the original due date.
What Texas asks of an S corporation
The S election is a federal status. For Texas, an S corporation is still a corporation, and the Comptroller lists S corporations among the entities that owe franchise tax when they are formed in Texas or do business there. The tax is not on net income. It is a margin tax built from total revenue, and the starting amounts come from the federal return.
So the Texas filing is the franchise tax report if revenue is above the no tax due threshold, and the Public Information Report if it is not. Texas does not tax individual income, so there is no state Schedule K-1 and no state estimated tax for shareholders on their K-1 income.
Both filings are required even in a loss year.
Which Texas form the client files
The decision turns on annualized total revenue, not profit. For the 2026 and 2027 report years the no tax due threshold is $2,650,000. The 2024 and 2025 report years used $2,470,000. A client just over the old number may now be under it.
At or below the threshold, the client does not file a No Tax Due Report for the 2026 report year. It files Form 05-102, the Public Information Report, because an entity legally formed as a corporation or LLC uses the PIR. Associations, trusts and other entity types file Form 05-167, the Ownership Information Report.
Above the threshold, the client files a franchise tax report. Form 05-169, the E-Z Computation, is available when annualized total revenue is $20 million or less, at a rate of 0.331%. The long form uses 0.375% for retail and wholesale and 0.75% for everyone else, and it is where the compensation deduction applies, capped at $480,000 per person for the 2026 and 2027 report years.
Do not judge by profit. A distributor just over the threshold with a thin margin files the tax report, and a consulting firm with a large profit but low revenue files the PIR only.
Report year and tax year are not the same label
Texas names the report by the year it is filed. The report due in May 2027 is the 2027 report, and for a calendar-year S corporation it covers tax year 2026. The Comptroller's example: the 2026 report for an entity that became taxable in 2025 was due on May 15, 2026.
Label the workpapers with both, for example "TX franchise, 2027 report (federal tax year 2026)".
One change starts with the 2026 report. The Comptroller says a taxable entity determines amounts taken from its federal return under the federal law in effect for that federal tax year, unless a Texas statute or rule specifically references the Internal Revenue Code, in which case the 2007 Code applies. Total revenue is covered by Tax Code Section 171.1011 and Rule 3.587, so recheck any workpaper that pulls revenue by fixed Form 1120-S line numbers.
Due dates for tax year 2026
Federal first. Form 1120-S is due on the 15th day of the third month after year end, which is March 15, 2027 for a calendar-year corporation. File Form 7004 by that date for a six-month automatic extension. The 2025 return was due March 16, 2026 because March 15 landed on a Sunday, so confirm the weekday each year.
Texas is May 15, and when that falls on a weekend or holiday the next business day applies. May 15, 2027 is a Saturday, so the 2027 report and PIR are due Monday, May 17, 2027. Webfile payments are timely until midnight Central time on the due date.
A franchise tax report filed late carries a $50 penalty even when no tax is due, and the unfiled years can later surface as a forfeiture notice.
Extensions and the payment trap
The Texas extension runs to November 15 for annual reports, and it is only tentatively granted. It holds if the client pays, by the original due date, either 90% of the tax that will be on the final report or 100% of the tax on the prior year's report. Penalty and interest apply to any unpaid part of the 90% from the original date.
The 100% option has conditions. The prior report must have been filed by May 14, and a first-year taxable entity cannot use it. For a new S corporation the only route is the 90% test, which means a rough computation of the report before May.
Pay online and the extension request is made for you. Do not also send Form 05-164 in that case. Use the form when there is no payment, such as a PIR-only client that wants more time. An entity that paid $10,000 or more in the previous state fiscal year must pay electronically, and at $500,000 or more the payment goes through TEXNET with code 13080.
Worked example: a client reported tax of 18,000 last year, filed that report on time and expects 26,000 this year. Paying 18,000 by the May due date protects the extension. Paying 18,000 by the May due date protects the extension under the 100% prior-year test. Without that option, the client would need at least 23,400, which is 90% of the expected 26,000.
No pass-through entity tax or composite return in Texas
Because Texas has no individual income tax, there is no state pass-through entity tax election and no composite return for Texas shareholders. The Comptroller franchise pages reviewed show no such election, so do not reach for another state's form out of habit.
The exposure sits in other states. If the S corporation has employees, an office or projects in a state that taxes income, that state may require its own return, nonresident shareholder withholding or composite filing. Ask the client which states have payroll or physical presence, and open that question before April.
Keep any other state's entity-level tax separate in the workpapers so it stays out of the Texas computation, and ask in January whether any Form 1120-S income came from outside Texas.
Documents to collect and the exact request
For the federal return: closed books for 2026, the shareholder list with percentages and any ownership change dates, loan and basis records, the prior-year return, payroll reports that support reasonable compensation, and the Form 2553 acceptance letter if this is the first year. Late-filing penalties are counted per shareholder, so the roster must be right. At $255 per shareholder per month for returns due in 2026, three shareholders and four months late is 12 shareholder-months, or 12 times $255.
For Texas: total revenue, Texas gross receipts versus everywhere else, cost of goods sold detail if the client wants that method, compensation by person, officer, director and manager names and addresses for the PIR, the registered agent and the prior Texas report.
Request wording that works: "For your Texas franchise filing we need three things by April 15: the names and home addresses of every officer and director on January 1, 2027, a copy of the last Texas report you filed, and your Texas sales versus total sales for 2026. If nothing changed in your officers, tell us so." Send it once.
Usual can hold this as a yearly request with a not-applicable option for items that do not apply and a will-send-later date for the prior report, so reminders pause until the promised date.
Failure modes to catch
The most common miss is the client that files the federal return and assumes Texas is done, so add a May 17, 2027 task when the federal return is accepted.
The second is an extension with no payment because the client expected to owe nothing. If the final report shows tax, penalty exposure covers the whole 90% shortfall.