Today, the Texas House of Representatives passed House Bill 3928, the franchise tax correction bill, by Rep. Jim Keffer (R - Eastland), which makes key improvements to House Bill 3 passed during last year's Third Called Special Session.
"I would like to thank Rep. Keffer for his work to keep the franchise tax fair for Texas businesses while still protecting property tax relief for homeowners," Speaker Craddick said. "This type of legislation is just another example of successful policies that keep the Texas economy as one of the most dynamic in the country."
House Bill 3928 increases the small business franchise tax exemption from $300,000 to $600,000. Since the new exemption is indexed to inflation, the level of exemption will continue to increase. The legislation eliminates the double taxation of guaranteed payments to partners and corrects the net operating loss credit carry-forward provision allowing businesses to take their losses at 4.5 percent. A partnership re-organization loophole has also been closed to ensure that businesses do not avoid paying the franchise tax.
"With the overwhelming passage of House Bill 3928, House members made necessary corrections to ensure that the revised franchise tax will treat taxpayers similarly and fairly, and will be a steady source of revenue for property tax relief," Rep. Jim Keffer said. "By doubling the small business tax exemption, we will keep entrepreneurship thriving in our state."
