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A BILL TO BE ENTITLED
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AN ACT
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relating to the minimum revenue calculation subject to the Texas |
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Franchise Tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 171.002, Tax Code, is amended to read as |
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follows: |
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Sec. 171.002. RATES; COMPUTATION OF TAX. (a) Subject to |
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Sections 171.003 and 171.1016 and except as provided by Subsection |
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(b), the rate of the franchise tax is 0.75 percent of taxable |
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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 0.375 percent of taxable margin for those |
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taxable entities primarily engaged in retail or wholesale trade. |
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(c) A taxable entity is primarily engaged in retail or |
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wholesale trade only if: |
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(1) the total revenue from its activities in retail or |
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wholesale trade is greater than the total revenue from its |
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activities in trades other than the retail and wholesale trades; |
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(2) except as provided by Subsection (c-1), less than |
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50 percent of the total revenue from activities in retail or |
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wholesale trade comes from the sale of products it produces or |
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products produced by an entity that is part of an affiliated group |
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to which the taxable entity also belongs; and |
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(3) the taxable entity does not provide retail or |
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wholesale utilities, including telecommunications services, |
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electricity, or gas. |
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(c-1) Subsection (c)(2) does not apply to total revenue from |
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activities in a retail trade described by Major Group 58 of the |
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Standard Industrial Classification Manual published by the federal |
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Office of Management and Budget. |
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(c-2) For purposes of Subsection (c)(3), the provision of |
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telecommunications services does not include selling telephone |
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prepaid calling cards. |
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(d) A taxable entity is not required to pay any tax and is |
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not considered to owe any tax for a period if: |
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(1) the amount of tax computed for the taxable entity |
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is less than $1,000; or |
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(2) the amount of the taxable entity's total revenue |
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from its entire business is less than or equal to [$2.47] $3.0 |
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million or the amount determined under Section 171.006 per 12-month |
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period on which margin is based. |
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SECTION 2. The changes in law made by this Act do not affect |
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tax liability accruing before the effective date of this Act. That |
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liability continues in effect as if this Act had not been enacted , |
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and the former law is continued in effect for the collection of |
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taxes due and for civil and criminal enforcement of the liability |
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for those taxes. |
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SECTION 3. This Act takes effect January 1, 2026. |