In the second Special Session of the 88th Legislature in 2023, Senator Bettencourt (R-Houston) led the passage of SB 2 and SB 3, which resulted in tax savings for Texas business and property owners.
SB 2 provided property tax reductions in the form of tax rate compression and an increased homestead exemption, while SB 3 doubled the franchise tax exemption. This legislative change removed approximately 67,000 Texas small and mid-sized businesses (SMBs) from the franchise tax roll and eliminated the need to file a 'No Tax Due' form.
According to the bill supporters, the passage of these bills not only alleviated administrative burdens but also saved billions for SMBs. "With SB 2 and SB 3, we were able to provide not only homeowners with tax savings but also our small and mid-sized businesses! SB 3 has doubled the franchise tax exemption eliminating franchise tax liability for about 67,000 small to midsize business owners. This exemption, combined with the elimination of filing burdens, creates huge yearly savings for our SMBs.” stated Senator Bettencourt.
Franchise tax reports are due on Wednesday, May 15th. Starting from reports due in 2024, taxable entities with total revenue at or below the 'No Tax Due' threshold are no longer required to file a Franchise Tax Report but must continue to file an information report each year.
Senator Tan Parker, the joint author of SB 3, highlighted that businesses across Texas will be saving both time and money under this new law: "We have given businesses across Texas an entire day of their time back by eliminating the burdensome administrative calculations and paperwork they would have had to file even with No Tax Due."
SB 2 is estimated to save non-homestead property owners around $4.2 billion per year through school district tax rate compression. Additionally, SB 3 is providing $300 million per year of franchise tax relief. This amounts to a total of $4.5 billion per year in tax relief for Texas businesses and property owners.
"The benefits for franchise taxpayers are being realized alongside historical tax reductions in SB 2. In the six major urban counties, the reduction on the entire tax bill of cities, counties, and special districts looks to be between 16.6 to 33.7 pennies, and on just ISDs alone the changes look like the ISD tax rate reductions are between 13.4 to 17.1 percent. This is one of those rare situations where the state can provide tax reductions without shifting the property tax burden,” concluded Senator Bettencourt.
