BILL ANALYSIS

S.B. 2774

By: Hinojosa, Adam

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill sponsor has informed the committee that the companies involved in the rental of industrial uniforms, industrial garments, and industrial linen supplies are currently required to pay the general state franchise tax rate of 0.75% instead of the retail/wholesale franchise tax rate of 0.375%, which is currently paid by similar industries such as those offering tuxedo rentals, tools, party and event supplies, and furniture rentals. S.B. 2774 seeks to remedy this inequity.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

S.B. 2774 amends the Tax Code to include among the entities subject to the franchise tax, at the rate applicable to entities primarily engaged in retail trade, a taxable entity primarily engaged in 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. The bill applies only to a report originally due on or after the bill's effective date.

EFFECTIVE DATE

January 1, 2027.