Get your tax IDs in Texas

An EIN, if you need one, takes minutes online. Texas has no state personal income tax, so there’s no state withholding to set up. The state adds a sales tax permit if you sell goods or taxable services, the franchise tax that comes with forming an LLC or corporation, and unemployment tax once you hire. The Texas Comptroller of Public Accounts handles the first two and the Texas Workforce Commission (TWC) the third.

What’s different in Texas

• No state income tax, personal or corporate. The state business tax is the franchise tax, figured on margin, not profit, and it applies to corporations, LLCs (including single-member LLCs), limited partnerships, LLPs and professional associations. It doesn’t apply to sole proprietorships and general partnerships owned directly by individuals. At or below $2,650,000 in annualized revenue no tax is owed, though a report is.
• The sales tax permit is free, though the Comptroller may require a security bond. The state rate is 6.25%; cities, counties and districts add up to 2%, for a combined maximum of 8.25%.
• Workers’ compensation is optional for most private employers. An employer that goes without it reports that to the Texas Department of Insurance, Division of Workers' Compensation (DWC) and gives up the liability limits that coverage brings.

Do this

1. Get an EIN from the IRS if you need one. The IRS requires one if you have employees and for partnerships, corporations, nonprofits and most LLCs. It’s free and, if approved, issued immediately online. Form your LLC or corporation first, since the application asks for the entity. Don’t pay a website to apply for you.
2. Apply for a sales tax permit on the Comptroller’s Texas Online Tax Registration Application if you’ll be selling or leasing goods, or selling taxable services, in Texas. The permit is free, though you may be asked to post a security bond, and you need one permit for each place of business. Have ready the owner's Social Security number or each partner's SSN or EIN, the Secretary of State file number for an entity, and a NAICS code. Allow 2 to 3 weeks for the permit to arrive.
3. Learn your rate and filing schedule. You collect the 6.25% state rate plus the local rate that applies, up to 2% more, for a combined cap of 8.25%; the Comptroller’s sales and use tax page links its Sales Tax Rate Locator. You file monthly or quarterly, as the Comptroller's approval letter says. Monthly returns are due the 20th of the following month, quarterly returns on April 20, July 20, October 20 and January 20, and a return is due even with nothing to report. Filing and paying on time earns a 0.5% discount.
4. Know when your franchise tax clock starts. An LLC, corporation or limited partnership is subject to franchise tax from its Secretary of State registration date, and its first report is due May 15 of the year after the year the entity was formed. The Comptroller sets up the account from the Secretary of State’s records and mails a letter with your taxpayer number and a Webfile number. Use them to complete its Franchise Tax Accountability Questionnaire online, and keep the letter: Webfile asks for that number. At or below $2,650,000 in annualized revenue you file no franchise tax report, only the information report; above it, the tax is 0.75% of margin, or 0.375% for retail and wholesale, and a business with annualized total revenue of $20 million or less can elect the EZ computation instead, 0.331% of total revenue. Everything files on the Comptroller’s Webfile, and the franchise tax overview has the forms.
5. Register with the Texas Workforce Commission (TWC) when you hire. You become liable once you pay $1,500 or more in wages in a calendar quarter, or have at least one employee in 20 different weeks of a calendar year (for a 501(c)(3) nonprofit, four or more employees in 20 different weeks of a year). TWC lists other triggers too: liability under the federal unemployment tax, taking over all or part of a business that was already liable, and separate thresholds for household and farm employers. Register through Unemployment Tax Registration (UTR) within 10 days of that. A new employer’s rate is the higher of its industry average or 2.7%, and for 2026 that is 2.7% for every industry, on the first $9,000 of each employee’s wages per year. Reports are filed electronically each quarter. With no state personal income tax, there’s no state withholding account and no state withholding form.
6. Decide on workers’ compensation. Coverage is optional for most private employers. An employer without it, called a non-subscriber, must report that to the Texas Department of Insurance, Division of Workers' Compensation (DWC), must report work injuries that cost more than a day of lost time, and loses the liability limits coverage provides when an employee sues.
7. Set up each new hire. On Form I-9, the employee completes Section 1 by their first day of work, and you complete Section 2 within three business days of the start date (by the first day if the job lasts less than three business days). Employees fill out the federal Form W-4 only; Texas has no state version. Report every new hire and rehire to the Child Support Division of the Office of the Attorney General within 20 calendar days of their first day earning wages. The penalty is $25 per unreported hire.

What you get back

• EIN: a nine-digit federal tax ID, shown on screen when approved. Print the confirmation letter.
• Sales tax permit: by mail within 2 to 3 weeks, one permit for each place of business, plus the letter that sets your filing schedule.
• Franchise tax: a letter from the Comptroller with your taxpayer number and Webfile number, then a yearly due date of May 15, first May 15 of the year after the year the entity was formed.
• Employer account: a TWC tax account with your rate, and quarterly reports due April 30, July 31, October 31 and January 31.

Not hiring yet? The sales tax permit, if you sell, and, for an LLC or corporation, the yearly Comptroller filing may be all you need for now.