SB 2774: Bill Makes Uniform Rental ‘Retail’ For A Lower Franchise Tax Rate

Caption

relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.

Caption from analyzed text · version F.

Summary

The statement of intent calls it “fair tax treatment.” Starts January 1, 2027, after the 2026 election.

The bill adds industrial uniform, garment and linen rental businesses to the Tax Code's definition of retail trade for the franchise tax. It touches companies that rent work uniforms and linens under two federal industry codes, 7213 and 7218. Those companies can then pay the lower retail franchise tax rate, starting with reports due on or after January 1, 2027.

Receipt

The receipt

89R-SB2774 · 2025-03-14

SOLD BY

Sen. Adam HinojosaRSenate 27

ITEM

relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.

WHAT IT DOES

The statement of intent calls it “fair tax treatment.” Starts January 1, 2027, after the 2026 election.

The bill adds industrial uniform, garment and linen rental businesses to the Tax Code's definition of retail trade for the franchise tax. It touches companies that rent work uniforms and linens under two federal industry codes, 7213 and 7218. Those companies can then pay the lower retail franchise tax rate, starting with reports due on or after January 1, 2027.

CHARGES

[x] PITCH: CORPORATE WELFARE

ACTUALLY

…“industrial uniforms, industrial garments, and industrial linen”…

Bill text, enrolled version (F)

The bill moves one named industry, uniform and linen rental, into the lower retail franchise tax rate.

[x] CARVE-OUTanalysis confidence 60%

THE TEXT

…“industrial uniforms, industrial garments, and industrial linen”…

Bill text, enrolled version (F)

The caption speaks of "certain entities," but the only change hands the lower retail franchise tax rate to one industry, uniform and linen rental. The committee statement admits that industry is the target.

[x] DELAYED STARTanalysis confidence 50%

THE TEXT

“This Act takes effect January 1, 2027.”

Bill text, enrolled version (F)

The tax change does not start until January 1, 2027. That is after the November 3, 2026 general election.

TOTAL

Net to General Revenue · FY 2026$0

LBB estimate, flow · fiscal note version I · ( ) = negative · source

Sources

Fiscal note · version I · April 15, 2025

Estimated Two-year Net Impact to General Revenue Related Funds for SB2774, As Introduced: an impact of $0 through the biennium ending August 31, 2027. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($2,860,000) for the 2026-27 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.

First year · FY 2026 · $0

Probable Net Positive/(Negative) Impact to General Revenue Related Funds

LBB published estimates · flow over the stated periods.

Source snapshot 2026-10-19, Central time.

HISTORY

Mar 14, 2025Received by the Secretary of the Senate
Mar 14, 2025Filed
Apr 3, 2025Read first time
Apr 3, 2025Referred to Finance
Apr 16, 2025Scheduled for public hearing on . . .
Apr 16, 2025Considered in public hearing
Apr 16, 2025Testimony taken in committee
Apr 16, 2025Vote taken in committee
Apr 16, 2025Reported favorably w/o amendments
Apr 16, 2025Committee report printed and distributed
Apr 22, 2025Placed on intent calendar
Apr 23, 2025Rules suspended-Regular order of business
Apr 23, 2025Vote recorded in Journal
Apr 23, 2025Read 2nd time & passed to engrossment
Apr 23, 2025Vote recorded in Journal
Apr 23, 2025Three day rule suspended
Apr 23, 2025Record vote
Apr 23, 2025Read 3rd time
Apr 23, 2025Passed
Apr 23, 2025Record vote
Apr 23, 2025Reported engrossed
Apr 24, 2025Received from the Senate
Apr 28, 2025Read first time
Apr 28, 2025Referred to Ways & Means
May 7, 2025Considered in formal meeting
May 7, 2025Reported favorably w/o amendment(s)
May 7, 2025Comte report filed with Committee Coordinator
May 7, 2025Committee report distributed
May 8, 2025Committee report sent to Calendars
May 9, 2025Laid out in lieu of companion HB 1769
May 9, 2025Read 2nd time
May 9, 2025Passed to 3rd reading
May 9, 2025Record vote RV#1907
May 9, 2025Statement(s) of vote recorded in Journal
May 10, 2025Read 3rd time
May 10, 2025Passed
May 10, 2025Record vote RV#2066
May 10, 2025Statement(s) of vote recorded in Journal
May 12, 2025House passage reported
May 12, 2025Reported enrolled
May 13, 2025Signed in the Senate
May 13, 2025Signed in the House
May 13, 2025Sent to the Governor
May 24, 2025Signed by the Governor
May 24, 2025Effective on . . . . . . . . . . . . . . . January 1, 2027

FILED UNDER

CORPORATE WELFARE

THE TEXT

…“industrial uniforms, industrial garments, and industrial linen”…

Bill text, enrolled version (F)

The bill moves one named industry, uniform and linen rental, into the lower retail franchise tax rate.

SIGNED FOR BY

House · 127 yea · 0 nay

Senate · 28 yea · 3 nay

Sources

House: Final passage · May 10, 2025. Journal. Published stock for this vote. Snapshot 2026-10-19, Central time.

Senate: Final passage · Apr 23, 2025. Journal. Published stock for this vote. Snapshot 2026-10-19, Central time.

All floor motions and other positions below.

Smells

THANK YOU FOR CHECKING THE RECEIPT

CAMPAIGN PAID FOR BY

Adam Hinojosa

Donors

Texans for Lawsuit Reform PAC$100KMayes Middleton$34,597Greg Abbott Campaign$33K

Not tied to this bill.

Sources

The author's campaign account only. Own money and internal transfers are separate on the member page.

Derived itemized flow · Oct 28, 2024 to May 5, 2026. State data as of Nov 4, 2026.

Derived itemized contributions on live regular reports and uncovered special-session dates. Internal account transfers and daily reports are excluded.

Texans for Lawsuit Reform PAC$100,000.00

Texans for Lawsuit Reform PAC

$100,000.00

Cash: $100,000.00
Paid by others: $0.00
Total: $100,000.00

Also funds 124 other sitting lawmakers.

Derived recipient stock · Jul 10, 2024 to Oct 23, 2026. State data as of Nov 4, 2026.

TEC account match.

Team

Sources

Derived itemized flow · on Oct 28, 2024. State data as of Nov 4, 2026.

Derived itemized contributions on live regular reports and uncovered special-session dates. Internal account transfers and daily reports are excluded.

Report IDs: 100989239.

Mayes Middleton$34,596.72

Greg Abbott Campaign$33,489.82

Greg Abbott Campaign

$33,489.82

Cash: $0.00
Paid by others: $33,489.82
Total: $33,489.82

travel $16,942.43text $12,002.83event $4,544.56

Also funds 9 other sitting lawmakers.

Derived recipient stock · Oct 29, 2024 to Sep 2, 2026. State data as of Nov 4, 2026.

Name match, not a verified identity: normalized filed name and state.

Team

Sources

Derived itemized flow · Oct 29, 2024 to Nov 12, 2024. State data as of Nov 4, 2026.

Derived itemized contributions on live regular reports and uncovered special-session dates. Internal account transfers and daily reports are excluded.

Report IDs: 100989239.

Money

Missing data does not establish zero giving. Display amounts are rounded.

×

Texans for Lawsuit Reform PAC

$100,000.00

Cash: $100,000.00
Paid by others: $0.00
Total: $100,000.00

Also funds 124 other sitting lawmakers.

Derived recipient stock · Jul 10, 2024 to Oct 23, 2026. State data as of Nov 4, 2026.

TEC account match.

Team

Sources

Derived itemized flow · on Oct 28, 2024. State data as of Nov 4, 2026.

Derived itemized contributions on live regular reports and uncovered special-session dates. Internal account transfers and daily reports are excluded.

Report IDs: 100989239.

×

Greg Abbott Campaign

$33,489.82

Cash: $0.00
Paid by others: $33,489.82
Total: $33,489.82

travel $16,942.43text $12,002.83event $4,544.56

Also funds 9 other sitting lawmakers.

Derived recipient stock · Oct 29, 2024 to Sep 2, 2026. State data as of Nov 4, 2026.

Name match, not a verified identity: normalized filed name and state.

Team

Sources

Derived itemized flow · Oct 29, 2024 to Nov 12, 2024. State data as of Nov 4, 2026.

Derived itemized contributions on live regular reports and uncovered special-session dates. Internal account transfers and daily reports are excluded.

Report IDs: 100989239.

Votes5

House May 10, 2025

Yea: 127
Nay: 0
Present, not voting: 2
Absent: 3
Excused: 18

Names

Named positions matched to lawmakers. See the journal for unmatched names.

House journal

Sources

Record 2066

SB 2774 was passed by (Record 2066): 127 Yeas, 0 Nays, 2 Present, not voting.

Published stock of positions for this vote, except where marked derived.

Yea: 127 (published)
Nay: 0 (published)
Present, not voting: 2 (published)
Absent: 3 (derived from named list)
Excused: 18 (derived from named list)

House journal. Source snapshot 2026-10-19, Central time.

House May 9, 2025

Yea: 137
Nay: 0
Present, not voting: 2
Absent: 4
Excused: 7

Names

Named positions matched to lawmakers. See the journal for unmatched names.

House journal

Sources

Record 1907

SB 2774 was passed to third reading by (Record 1907): 137 Yeas, 0 Nays, 2 Present, not voting.

Published stock of positions for this vote, except where marked derived.

Yea: 137 (published)
Nay: 0 (published)
Present, not voting: 2 (published)
Absent: 4 (derived from named list)
Excused: 7 (derived from named list)

House journal. Source snapshot 2026-10-19, Central time.

Senate Apr 23, 2025

Yea: 28
Nay: 3
Present, not voting: Not printed
Absent: 0
Excused: 0

Names

Named positions matched to lawmakers. See the journal for unmatched names.

Senate journal

Sources

The bill was read third time and was passed by the following vote: Yeas 28, Nays 3. (Same as previous roll call)

Published stock of positions for this vote, except where marked derived.

Yea: 28 (published)
Nay: 3 (published)
Present, not voting: Not printed
Absent: 0 (derived from named list)
Excused: 0 (derived from named list)

Senate journal. Source snapshot 2026-10-19, Central time.

Senate Apr 23, 2025

Yea: 28
Nay: 3
Present, not voting: Not printed
Absent: 0
Excused: 0

Names

Named positions matched to lawmakers. See the journal for unmatched names.

Senate journal

Sources

Senator A. Hinojosa moved that Senate Rule 7.18 and the Constitutional Rule requiring bills to be read on three several days be suspended and that SB 2774 be placed on its third reading and final passage. The motion prevailed by the following vote: Yeas 28, Nays 3.

Published stock of positions for this vote, except where marked derived.

Yea: 28 (published)
Nay: 3 (published)
Present, not voting: Not printed
Absent: 0 (derived from named list)
Excused: 0 (derived from named list)

Senate journal. Source snapshot 2026-10-19, Central time.

Senate Apr 23, 2025

Yea: Not printed
Nay: Not printed
Present, not voting: Not printed
Absent: Not printed
Excused: Not printed

Names

Named positions matched to lawmakers. See the journal for unmatched names.

Senate journal

Names were not printed for yea. Only the named positions are included in member records.

Voice vote. No numeric tally or individual yeas are inferred.

Sources

Senator A. Hinojosa moved to suspend the regular order of business to take up for consideration SB 2774 at this time on its second reading: SB 2774, Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax. The motion prevailed. Senators Hughes, Kolkhorst, and Perry asked to be recorded as voting "Nay" on suspension of the regular order of business. The bill was read second time and was passed to engrossment by a viva voce vote.

Published stock of positions for this vote, except where marked derived.

Yea: Not printed
Nay: Not printed
Present, not voting: Not printed
Absent: Not printed
Excused: Not printed

Senate journal. Source snapshot 2026-10-19, Central time.

Witnesses6

For: 4
Against: 1
On: 1

Names

For

Self; Textile Rental Association America1 registration
Self; TRSA the Linen, Uniform and Facility Services Association1 registration
Texas Taxpayers and Research Association - (TTARA)1 registration
Textile Rental Services Association1 registration

Against

Self1 registration

On

Comptroller of Public Accounts1 registration

Sources

6 parsed registrations across the loaded witness lists.

Derived stock of witness registrations. Repeated appearances count separately. Organizations and self-representation appear as printed.

Senate witness list. Source snapshot 2026-10-20, Central time.

Fiscal

Net to General Revenue · FY 2026$0

LBB estimate, flow · fiscal note version I · ( ) = negative · source

Sources

Fiscal note · version I · April 15, 2025

Estimated Two-year Net Impact to General Revenue Related Funds for SB2774, As Introduced: an impact of $0 through the biennium ending August 31, 2027. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($2,860,000) for the 2026-27 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.

First year · FY 2026 · $0

Probable Net Positive/(Negative) Impact to General Revenue Related Funds

LBB published estimates · flow over the stated periods.

Source snapshot 2026-10-19, Central time.

How this was graded

Analysis of text version F by claude-opus-5-5, Oct 22, 2026, against the published rubric.

Sources

Texas Senate · Filed Mar 14, 2025

05/24/2025 E Effective on . . . . . . . . . . . . . . .

Texas Legislature Online · Introduced · Senate Committee Report · Engrossed · House Committee Report · Enrolled

Data snapshot Oct 26, 2026 at 4:20 AM CDT. Grades, charges, quotes and corrections follow the published record.

Companion

HB 1769 by Darby (identical)

Subjects

Business & Commerce--General

Taxation--Franchise

Text

The text as introduced · 285 words

89R6021 JBD-F

By: Hinojosa of Nueces
S.B. No. 2774

A BILL TO BE ENTITLED

AN ACT

relating to the classification of certain entities as primarily

engaged in retail trade for purposes of the franchise tax.

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

SECTION 1. Section 171.0001(12), Tax Code, is amended to

read as follows:

(12) "Retail trade" means:

(A) the activities described in Division G of the

1987 Standard Industrial Classification Manual published by the

federal Office of Management and Budget;

(B) apparel rental activities classified as

Industry 5999 or 7299 of the 1987 Standard Industrial

Classification Manual published by the federal Office of Management

and Budget;

(C) the activities classified as Industry Group

753 of the 1987 Standard Industrial Classification Manual published

by the federal Office of Management and Budget;

(D) rental-purchase agreement activities

regulated by Chapter 92, Business & Commerce Code;

(E) activities involving the rental or leasing of

tools, party and event supplies, and furniture that are classified

as Industry 7359 of the 1987 Standard Industrial Classification

Manual published by the federal Office of Management and Budget;

[ and ]

(F) heavy construction equipment rental or

leasing activities classified as Industry 7353 of the 1987 Standard

Industrial Classification Manual published by the federal Office of

Management and Budget ; and

(G) activities involving the rental of

industrial uniforms, industrial garments, and industrial linen

supplies that are classified as Industry 7213 or 7218 of the 1987

Standard Industrial Classification Manual published by the federal

Office of Management and Budget .

SECTION 2. This Act applies only to a report originally due

on or after the effective date of this Act.

SECTION 3. This Act takes effect January 1, 2027.

Verdict: Smells

The receipt

SOLD BY

ITEM

WHAT IT DOES

CHARGES

TOTAL

HISTORY

SIGNED FOR BY

Donors

Texans for Lawsuit Reform PAC

Greg Abbott Campaign

Texans for Lawsuit Reform PAC

Greg Abbott Campaign

House May 10, 2025

House May 9, 2025

Senate Apr 23, 2025

Senate Apr 23, 2025

Senate Apr 23, 2025

For

Against

On

Companion