Wyoming LLC vs Texas LLC: 2026 Comparison
By {AUTHOR_OPS_NAME}, Director of Filing Operations | Published May 15, 2026 | Updated May 15, 2026
Wyoming and Texas both have no state income tax, but they differ significantly on franchise tax, charging order protection, and privacy. Texas imposes a franchise tax on businesses with revenue exceeding $1.18 million, while Wyoming has no franchise tax at any level. Wyoming provides explicit single-member charging order protection and member privacy that Texas does not match. This guide compares the two states across every factor that matters for LLC owners. For a complete overview of Wyoming LLC benefits, see our Wyoming LLC guide.
Side-by-Side Comparison Table
| Factor | Wyoming | Texas |
|---|---|---|
| Filing Fee | $100 | $300 |
| Annual Report | $60/year | $0 (franchise tax report) |
| Franchise Tax | None | 0.375%-0.75% above $1.18M |
| State Income Tax | None | None |
| Single-Member Charging Order | Explicit protection | Not explicitly extended |
| Member Privacy | Not listed on filings | Managers listed on filings |
| LLC Statute Enacted | 1977 | 1991 |
| Foreign Qualification Fee | N/A (home state) | $750 to register WY LLC |
Wyoming Advantages Over Texas
Wyoming's most significant advantage is the absence of a franchise tax. Texas imposes a franchise tax (margin tax) on all businesses with total revenue exceeding $1.18 million. The rate is 0.375% for qualifying wholesale and retail businesses and 0.75% for all other businesses. For a consulting firm with $2 million in revenue, the Texas franchise tax could be $3,000 to $7,500 per year depending on the margin calculation method. Wyoming imposes no franchise tax at any revenue level. Second, Wyoming provides explicit single-member charging order protection under § 17-29-503(a). Texas does not explicitly extend charging order protection to single-member LLCs, creating uncertainty for solo business owners. Third, Wyoming offers stronger privacy: neither members nor managers are listed on Wyoming's Articles of Organization. In Texas, the Certificate of Formation requires listing managers or governing persons, making them part of the public record. For businesses prioritizing asset protection, privacy, and franchise- tax-free operations, Wyoming is the clearly superior choice.
Texas Franchise Tax Deep Dive
The Texas franchise tax deserves detailed examination because it affects every business entity doing business in Texas, regardless of where the entity is formed. The tax applies when total revenue exceeds $1.18 million (the no-tax-due threshold, which is periodically adjusted). Below this threshold, businesses must still file a No Tax Due report with the Texas Comptroller annually but owe no tax. Above the threshold, the tax is calculated on the entity's taxable margin. Taxable margin is total revenue minus the greatest of four deductions: cost of goods sold, compensation paid, 30% of total revenue, or $1 million. The resulting margin is taxed at 0.375% for qualifying wholesale and retail businesses or 0.75% for all other businesses. There is also an E-Z computation option that taxes total revenue at 0.331% with no deductions, which benefits businesses with low margins. The franchise tax report is due May 15 each year. Late filing incurs penalties of 5% per month up to 25% plus interest. Wyoming has no equivalent tax — there is no franchise tax, no margin tax, and no gross receipts tax at any revenue level.
Texas Advantages Over Wyoming
Texas has genuine advantages in specific scenarios. If you operate a physical business in Texas — restaurant, retail store, construction company, medical practice — forming a Texas LLC avoids the $750 foreign qualification fee and annual Texas registration requirements that a Wyoming LLC would incur. Texas is the second-largest US economy, which means a Texas LLC has immediate local credibility with Texas-based customers, vendors, and lenders. Texas banks are more familiar with Texas LLCs, which can simplify the account opening process for businesses that prefer local banking. For businesses under the $1.18 million franchise tax threshold, Texas has no state income tax and no franchise tax liability, making the effective tax burden comparable to Wyoming. The Texas filing fee of $300 is higher than Wyoming's $100, but if you would need to foreign-qualify a Wyoming LLC in Texas anyway ($750), forming in Texas is cheaper for Texas-based operations. Texas also has no annual report filing fee — the franchise tax report serves as the annual compliance filing. For businesses operating primarily in Texas with revenue under $1.18 million, a Texas LLC is a reasonable choice.
When Wyoming Makes Sense Over Texas
Choose Wyoming over Texas when your business operates in multiple states or entirely online with no Texas physical presence, when your revenue exceeds or is expected to exceed the $1.18 million franchise tax threshold, when asset protection is a priority (single-member charging order protection under § 17-29-503(a)), when privacy matters (Wyoming does not list members or managers on public filings), or when you are building a holding company structure that benefits from Wyoming's charging order protection at the parent level. A $2 million revenue consulting business saves $3,000 to $7,500 per year in Texas franchise tax by operating through a Wyoming LLC with no Texas nexus. Even below the franchise tax threshold, Wyoming's explicit single-member protection and privacy provisions provide advantages that Texas does not match. For multi-state businesses, remote professionals, and high-revenue operations, Wyoming is the stronger choice. The $497 formation cost through Cowboy State Filings and $160 annual maintenance make Wyoming the most cost-effective option for businesses that are not tied to a specific physical location in Texas.
When Texas Makes Sense Over Wyoming
Choose Texas when your business operates primarily in Texas with a physical office, retail location, or employees in the state. In this scenario, you would need to register any out-of-state LLC in Texas anyway, at a cost of $750 for foreign qualification plus annual compliance. Forming directly in Texas avoids this extra expense. Texas makes sense when your revenue is under the $1.18 million franchise tax threshold, as you would owe no franchise tax and face no state income tax — a comparable tax position to Wyoming. Texas is also appropriate when your lenders or business partners specifically require a Texas entity, when you need local banking relationships with Texas community banks, or when the nature of your business requires Texas state licensing that is tied to a Texas entity (certain construction, energy, and professional services licenses). For Texas-based businesses below the franchise tax threshold with no asset protection concerns, a Texas LLC is a reasonable and straightforward choice. However, even Texas-based business owners should consider a Wyoming holding LLC above a Texas operating LLC to capture charging order protection and privacy at the ownership level.
Frequently Asked Questions: Wyoming vs Texas
Zero franchise tax. Zero state income tax. Choose Wyoming.
$497 total. No franchise tax at any revenue level. Single-member charging order protection. State filing, registered agent, operating agreement, EIN, and bank applications included.
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