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A BILL TO BE ENTITLED
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AN ACT
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relating to lowering the rates of and repealing the franchise tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. (a) Effective January 1, 2024, Sections |
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171.002(a) and (b), Tax Code, are amended to read as follows: |
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(a) Subject to Sections 171.003 and 171.1016 and except as |
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provided by Subsection (b), the rate of the franchise tax is 0.375 |
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[0.75] percent of taxable margin. |
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(b) Subject to Sections 171.003 and 171.1016, the rate of |
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the franchise tax is 0.188 [0.375] percent of taxable margin for |
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those taxable entities primarily engaged in retail or wholesale |
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trade. |
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(b) Effective January 1, 2024, Section 171.1016(b), Tax |
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Code, is amended to read as follows: |
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(b) The amount of the tax for which a taxable entity that |
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elects to pay the tax as provided by this section is liable is |
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computed by: |
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(1) determining the taxable entity's total revenue |
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from its entire business, as determined under Section 171.1011; |
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(2) apportioning the amount computed under |
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Subdivision (1) to this state, as provided by Section 171.106, to |
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determine the taxable entity's apportioned total revenue; and |
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(3) multiplying the amount computed under Subdivision |
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(2) by the rate of 0.166 [0.331] percent. |
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(c) This section applies only to a report originally due on |
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or after January 1, 2024. |
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SECTION 2. (a) Effective January 1, 2025, Chapter 171, Tax |
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Code, is repealed. |
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(b) A taxable entity that is subject to the franchise tax |
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imposed under Chapter 171, Tax Code, on December 31, 2024, is not |
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required to file a franchise tax report or pay a tax on the taxable |
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entity's taxable margin for the period ending on that date. |
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(c) Chapter 171, Tax Code, as that chapter existed |
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immediately before its repeal by this Act, and Subtitle B, Title 2, |
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Tax Code, continue to apply to audits, deficiencies, |
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redeterminations, and refunds of any tax due or collected under |
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Chapter 171 until barred by limitations. |
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(d) The repeal of Chapter 171, Tax Code, does not affect: |
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(1) the status of a taxable entity that has had its |
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corporate privileges, certificate of authority, certificate of |
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organization, certificate of limited partnership, corporate |
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charter, or registration revoked, a suit filed against it, or a |
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receiver appointed under Subchapter F, G, or H of that chapter; |
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(2) the ability of the comptroller of public accounts, |
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secretary of state, or attorney general to take action against a |
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taxable entity under Subchapter F, G, or H of that chapter for |
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actions that took place before the repeal; or |
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(3) the right of a taxable entity to contest a |
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forfeiture, revocation, lawsuit, or appointment of a receiver under |
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Subchapter F, G, or H of that chapter. |
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SECTION 3. This Act takes effect January 1, 2024. |