Texas Codes

Tex. Tax Code § 171.001 (2026)

Tax Imposed

✓ current as of May 2026

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Sec. 171.001. TAX IMPOSED. (a) A franchise tax is imposed on each taxable entity that does business in this state or that is chartered or organized in this state.

(b) The tax imposed under this chapter extends to the limits of the United States Constitution and the federal law adopted under the United States Constitution.

(c) The tax imposed under this section or Section 171.0011 is not imposed on an entity if, during the period on which the report is based, the entity qualifies as a passive entity as defined by Section 171.0003.

(d) Notwithstanding Subsection (a), the tax imposed under this chapter is not imposed on a taxable entity that qualifies as a new veteran-owned business as defined by Section 171.0005 until the earlier of:

(1) the fifth anniversary of the date on which the taxable entity begins doing business in this state; or

(2) the date the taxable entity ceases to qualify as a new veteran-owned business as defined by Section 171.0005.

Acts 1981, 67th Leg., p. 1691, ch. 389, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 1991, 72nd Leg., ch. 901, Sec. 53(a), eff. Aug. 26, 1991; Acts 1991, 72nd Leg., 1st C.S., ch. 5, Sec. 8.01, eff. Jan. 1, 1992; Acts 1993, 73rd Leg., ch. 765, Sec. 7, eff. Aug. 30, 1993; Acts 1995, 74th Leg., ch. 914, Sec. 12, eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch. 1002, Sec. 1, eff. Jan. 1, 1996; Acts 1997, 75th Leg., ch. 1185, Sec. 1, eff. Jan. 1, 1998; Acts 1999, 76th Leg., ch. 184, Sec. 1, eff. Jan. 1, 2000; Acts 2003, 78th Leg., ch. 209, Sec. 31, 32, eff. Oct. 1, 2003.

Amended by:

Acts 2006, 79th Leg., 3rd C.S., Ch. 1 (H.B. 3), Sec. 2, eff. January 1, 2008.

Acts 2007, 80th Leg., R.S., Ch. 1282 (H.B. 3928), Sec. 5, eff. January 1, 2008.

Acts 2015, 84th Leg., R.S., Ch. 329 (S.B. 1049), Sec. 4, eff. January 1, 2016.

Acts 2015, 84th Leg., R.S., Ch. 329 (S.B. 1049), Sec. 9(2), eff. January 1, 2020.

Acts 2021, 87th Leg., R.S., Ch. 859 (S.B. 938), Sec. 5, eff. January 1, 2022.

Acts 2021, 87th Leg., R.S., Ch. 859 (S.B. 938), Sec. 9(3), eff. January 1, 2026.

Acts 2025, 89th Leg., R.S., Ch. 335 (H.B. 346), Sec. 2(3), eff. September 1, 2025.

Notes of Decisions

Cited in 84 cases (9 in the last 5 years), 1986–2026 · leading case: Anderson-Clayton Bros. Funeral Home, Inc. v. Strayhorn, 149 S.W.3d 166 (Tex. App. 2004).

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Anderson-Clayton Bros. Funeral Home, Inc. v. Strayhorn, 149 S.W.3d 166 (Tex. App. 2004). · cites it 6× “See Tex. Tax Code Ann. § 171.001 (a)(1) (West Supp.”

Rylander v. Fisher Controls Int'l, Inc., 45 S.W.3d 291 (Tex. App. 2001). · cites it 2× “See Tex. Tax Code Ann. §§ 171.001 (a)(1), .002 (West Supp.”

Tgs-nopec Geophysical Co. v. Combs, 340 S.W.3d 432 (Tex. 2011). “S., ch. 1185, §§ 5-6, 1997 Tex. Gen. Laws 4569 , 4569-70.”

Sharp v. House of Lloyd, Inc., 815 S.W.2d 245 (Tex. 1991). · cites it 2× “The Texas Franchise Tax, Tex.Tax Code § 171.001, is imposed on every domestic and foreign corporation chartered or authorized to do business within the state, or doing business within the state, and not specifically exempted by statute from the payment of such tax.”

Wilburn v. State, 824 S.W.2d 755 (Tex. App. 1992). · cites it 3× “-001, at 1691 (Tex.Tax Code Ann. § 171.001, since amended).”

Westcott Commc'ns, Inc. v. Strayhorn, 104 S.W.3d 141 (Tex. App. 2003). · cites it 3× “Westcott claims that the true nature of its services is analogous to providing live seminars and transmitting cable television services, both of which would be *146 taxed based on the location of the recipients. We disagree. Subject to certain exceptions, the franchise tax is…”

Upjohn Co. v. Rylander, 38 S.W.3d 600 (Tex. App. 2000). · cites it 2× “See Tex.Tax Code Ann. § 171.001 (West 1992 & Supp.”

MacFarlane v. Utah State Tax Comm'n, 2006 UT 18 (Utah 2006). · cites it 2× “Code § 23800 (West 2004) with Tex. Tax Code Ann. § 171.001 (Vernon 2002 & Supp.”

Rylander v. 3 Beall Bros. 3, Inc., 2 S.W.3d 562 (Tex. App. 1999). · cites it 2× “See Tex. Tax Code Ann. § 171.001 (West 1992 & Supp.”

Tri-State Bldg. Specialties, Inc. v. NCI Bldg. Sys., L.P., 184 S.W.3d 242 (Tex. App. 2005). “See Tex. Tax Code Ann. §§ 171.001 -.894 (Vernon 2002 & Vernon Supp.”

In Re Nestle USA, Inc., 387 S.W.3d 610 (Tex. 2012). “Tex. Tax Code §§ 171.001, 171.0002. . Id.”

INOVA Diagnostics, Inc. v. Strayhorn, 166 S.W.3d 394 (Tex. App. 2005). · cites it 2× “Accordingly, it is useful to briefly review the relevant statutes and rules before discussing INOVA’s issues.”

Show all 84 citing cases →

— Tex. Tax Code § 171.001(a) — 14 cases

Tgs-nopec Geophysical Co. v. Combs, 340 S.W.3d 432 (Tex. 2011). “S., ch. 1185, §§ 5-6, 1997 Tex. Gen. Laws 4569 , 4569-70.”

Graphic Packaging Corp. v. Hegar, 538 S.W.3d 89 (Tex. 2017).

Lone Star Coll. Sys. & Richard Carpenter v. Immigr. Reform Coalition of Texas (IRCOT), 418 S.W.3d 263 (Tex. App. 2013).

Davis v. State, 846 S.W.2d 564 (Tex. App. 1993).

Cent. Power & Light Co. v. Sharp, 919 S.W.2d 485 (Tex. App. 1996).

— Tex. Tax Code § 171.001(a)(1) — 2 cases

Upjohn Co. v. Rylander, 38 S.W.3d 600 (Tex. App. 2000). “See Tex.Tax Code Ann. § 171.001 (West 1992 & Supp.”

Sharp v. Caterpillar, Inc., 932 S.W.2d 230 (Tex. App. 1996).

— Tex. Tax Code § 171.001(c) — 2 cases

Westcott Commc'ns, Inc. v. Strayhorn, 104 S.W.3d 141 (Tex. App. 2003). “Westcott claims that the true nature of its services is analogous to providing live seminars and transmitting cable television services, both of which would be *146 taxed based on the location of the recipients. We disagree. Subject to certain exceptions, the franchise tax is…”

Rylander v. Bandag Licensing Corp., 18 S.W.3d 296 (Tex. App. 2000).

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