Selling a business in Texas: what the state takes (2026)
Texas has no broad individual income tax. Here is what an owner selling company stock pays, with 2026 rules from official sources and worked examples at $10 million, $25 million and $50 million.
- None
- Top Texas income tax rate (2026)
- $0
- State tax on a $25M long-term gain
- 23.8%
- Combined federal and state rate on $25M
- 43 of 51
- Rank by total tax on $25M (1 = highest)
How Texas taxes a business sale
- Income tax
- No broad-based individual income tax.
- Long-term capital gains
- Texas has no individual income tax, so a resident's gain on selling private company stock owes no state tax.
- Entity-level taxes
- Corporations (including S corps), LLCs and most partnerships pay the franchise (margin) tax at 0.75% (0.375% retail/wholesale), with a $2,650,000 no-tax-due revenue threshold for 2026 reports. Sole proprietorships and general partnerships owned directly by natural persons are not subject. A shareholder's sale of stock is not taxed at the entity level.
Three worked examples
| Long-term gain | $10,000,000 | $25,000,000 | $50,000,000 |
|---|---|---|---|
| Federal capital gains tax (20%) | $2,000,000 | $5,000,000 | $10,000,000 |
| Net investment income tax (3.8%) | $380,000 | $950,000 | $1,900,000 |
| Texas tax | $0 | $0 | $0 |
| Total tax | $2,380,000 | $5,950,000 | $11,900,000 |
| Effective combined rate | 23.80% | 23.80% | 23.80% |
| Net proceeds after tax | $7,620,000 | $19,050,000 | $38,100,000 |
Seller’s tax calculator
Estimate federal and state tax on a stock sale and what is left before fees and debt.
- Long-term capital gain
- $25,000,000
- Federal capital gains tax (20%)
- $5,000,000
- Net investment income tax (3.8%)
- $950,000
- Texas tax
- $0
- Total tax
- $5,950,000
- Effective rate on the gain
- 23.80%
- Net proceeds after tax
- $19,050,000
Illustration, not tax advice. Assumes a resident individual, the whole gain long-term, top marginal rates, no state credits, installment terms, QSBS exclusion or other planning, and no local taxes. Net proceeds are before transaction fees, debt repayment, escrows and earn-outs. Rates are for tax year 2026 where published; see the methodology.
Compare with other states
Neighboring states
- Arkansas24.5% combined, $18.86M net
- Louisiana26.8% combined, $18.30M net
- New Mexico29.6% combined, $17.60M net
- Oklahoma28.3% combined, $17.93M net
Common comparisons
- California37.1% combined, $15.72M net
- New York34.1% combined, $16.48M net
- Florida23.8% combined, $19.05M net
- Nevada23.8% combined, $19.05M net
- Washington33.5% combined, $16.63M net
- Tennessee23.8% combined, $19.05M net
Methodology and sources
Texas figures are for tax year 2026. No individual income tax; franchise tax figures are for 2026 reports per the Comptroller. The examples assume a resident individual selling privately held stock for a long-term gain equal to the sale price (zero basis), with every dollar taxed at the top marginal rates, the federal 20% capital gains rate and the 3.8% net investment income tax, and no planning, credits or local taxes. Full assumptions are in the report methodology.
All 50 states and DC with source URLs.
- 1Texas Comptroller, Franchise tax (rates and 2026 no-tax-due threshold)
- 2Texas Comptroller, Franchise Tax Overview (98-806)
- 3Tax Foundation, State Individual Income Tax Rates and Brackets, 2026. Secondary source
Data last updated October 26, 2026.
Cite this research
You may quote and republish figures from this page with attribution and a link to the source.
Citation
Laurent Capital Research, “The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Texas,” 2026, https://laurent.capital/research/seller-tax-map/texasLink (HTML)
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