The Texas House of Representatives has voted for a new bill which will increase the number of businesses qualifying for exemption from the state’s business tax.
Bill 4765, which will exempt businesses with annual revenues of less than USD1m, passed the House on May 4 in a unanimous vote. Currently, the exemption threshold is set at USD300,000 of revenues.
It has been estimated that the change will benefit an additional 40,000 companies. The average tax cut is expected to amount to about USD4,400.
The Texas business, or franchise, tax is a revenue tax charged at 0.5% for qualifying wholesalers and retailers and 1.0% for most other entities.
The increased exemption level will remain in place for two years, unless renewed in the next Congressional session, and will cost the state government an estimated USD172m in lost revenues. Nevertheless, Rep. Rene Oliveira, chairman of the state House Ways and Means Committee said that the bill would provide a timely, albeit temporary, “economic stimulus” to small firms.
The bill goes before the state Senate after a final House vote.
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