bill raising the franchise tax threshold to $3M

The text as introduced · 424 words

By: Dean
H.B. No. 5181

A BILL TO BE ENTITLED

AN ACT

relating to the minimum revenue calculation subject to the Texas

Franchise Tax.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 171.002, Tax Code, is amended to read as

follows:

Sec. 171.002. RATES; COMPUTATION OF TAX. (a) Subject to

Sections 171.003 and 171.1016 and except as provided by Subsection

(b), the rate of the franchise tax is 0.75 percent of taxable

margin.

(b) Subject to Sections 171.003 and 171.1016, the rate of

the franchise tax is 0.375 percent of taxable margin for those

taxable entities primarily engaged in retail or wholesale trade.

(c) A taxable entity is primarily engaged in retail or

wholesale trade only if:

(1) the total revenue from its activities in retail or

wholesale trade is greater than the total revenue from its

activities in trades other than the retail and wholesale trades;

(2) except as provided by Subsection (c-1), less than

50 percent of the total revenue from activities in retail or

wholesale trade comes from the sale of products it produces or

products produced by an entity that is part of an affiliated group

to which the taxable entity also belongs; and

(3) the taxable entity does not provide retail or

wholesale utilities, including telecommunications services,

electricity, or gas.

(c-1) Subsection (c)(2) does not apply to total revenue from

activities in a retail trade described by Major Group 58 of the

Standard Industrial Classification Manual published by the federal

Office of Management and Budget.

(c-2) For purposes of Subsection (c)(3), the provision of

telecommunications services does not include selling telephone

prepaid calling cards.

(d) A taxable entity is not required to pay any tax and is

not considered to owe any tax for a period if:

(1) the amount of tax computed for the taxable entity

is less than $1,000; or

(2) the amount of the taxable entity's total revenue

from its entire business is less than or equal to [ $2.47 ] $3.0

million or the amount determined under Section 171.006 per 12-month

period on which margin is based.

SECTION 2. The changes in law made by this Act do not affect

tax liability accruing before the effective date of this Act. That

liability continues in effect as if this Act had not been enacted ,

and the former law is continued in effect for the collection of

taxes due and for civil and criminal enforcement of the liability

for those taxes.

SECTION 3. This Act takes effect January 1, 2026.