Texas New Veteran-Owned Business Fee and Franchise Tax Exemption

A new veteran-owned business in Texas gets two things: the Secretary of State waives the filing fee on the certificate of formation, ordinarily $300 for a for-profit corporation or LLC, and the Comptroller treats the entity as exempt from the franchise tax for its first five years. The ownership test is absolute. The business has to be 100 percent owned by an individual or individuals, with each owner an honorably discharged veteran of a branch of the United States Armed Services. One non-veteran owner, of any size, breaks it. The entity has to have been formed or organized in Texas on or after January 1, 2022. The order of operations matters and trips people up. Each veteran owner has to obtain a Veteran Verification Letter from the Texas Veterans Commission before the entity is formed. Then the owners complete Comptroller form 05-904, Certification of New Veteran-Owned Business, and file it together with the verification letters and the certificate of formation at the Secretary of State. A business that files its certificate of formation first and asks about the waiver afterward has already paid the fee. The exemption runs until the earlier of the fifth anniversary of the entity's existence or the date the business stops qualifying as a new veteran-owned business. During that window the entity is not required to file a No Tax Due Report, and is not required to file a Public Information Report or an Ownership Information Report. Adding a non-veteran owner ends the exemption from that date. The program was originally temporary. Senate Bill 938 of the 87th Legislature created this version with an expiration date of January 1, 2026. House Bill 346 of the 89th Legislature, signed June 12, 2025 and effective September 1, 2025, repealed the sections of Senate Bill 938 that would have repealed Business Organizations Code section 12.005 and Tax Code section 171.0005 on that date, making the fee waiver and the five-year franchise tax exemption permanent law. Senate Bill 524, which would have done the same thing and which this entry first credited, passed the Senate and died in the House Ways and Means Committee; its bill analysis is still online and reads like the law. A veteran who read in 2024 that the window was closing at the end of 2025 was reading accurate information that is now out of date. The Texas Veterans Commission Veteran Entrepreneur Program issues the verification letters and also provides business planning and capital assistance at no charge.