TX
Texas Senate Bill SB2206

Texas 2025 - 89th Regular

Texas Senate Bill SB2206

Filed
3/11/25  
Out of Senate Committee
4/9/25  
Voted on by Senate
4/28/25  
Out of House Committee
5/21/25  
Bill Becomes Law
 

Caption

Relating to a franchise tax credit for, and the application of sales and use taxes to, certain research and development expenses.

Impact

If enacted, SB2206 will significantly alter existing tax laws related to franchise taxes, particularly focusing on incentivizing R&D activities. The repeal of certain previous tax code provisions, such as Section 151.3182 and Subchapter M, indicates a shift in how tax liabilities are assessed and credits are allocated. Taxable entities will still retain the ability to claim credits accrued under repealed provisions until their expiration. By incentivizing R&D funding, the bill could rejuvenate sectors reliant on innovation and potentially enhance the state's competitive standing in attracting businesses and talent.

Summary

Senate Bill 2206 (SB2206) proposes a franchise tax credit for certain research and development (R&D) expenses incurred by taxable entities within the state of Texas. The bill introduces Subchapter T under Chapter 171 of the Tax Code, which delineates the eligibility criteria and calculation methods for the proposed tax credit. Under the provisions of SB2206, qualifying research expenses will allow entities to claim credits not exceeding 50% of their tax due for the report on qualified activities conducted within Texas. This aims to foster a conducive environment for innovation and economic growth in alignment with educational institutions.

Sentiment

The sentiment surrounding SB2206 appears largely supportive among proponents who see it as a vehicle for promoting economic growth through technological advancements and partnerships between academia and industry. Supporters articulate that it will harness Texas's position as a leader in R&D activities. However, there may be some contention among fiscal conservatives who may view new tax credits as detrimental to the state's revenue or question the extent of the benefits relative to the cost to taxpayers.

Contention

Criticism of SB2206 may revolve around its potential implications for state revenue, with detractors arguing that while the bill promotes local business and innovation, it could lead to significant reductions in state funding for essential services. Concerns have also been raised about the fairness of extending such credits only to those engaged in R&D, potentially creating disparities in tax treatment among different business sectors. The emphasis on certain types of tax credits could be perceived as government favoritism, igniting debates about equity in tax policy.

Texas Constitutional Statutes Affected

Tax Code

  • Chapter 171. Franchise Tax
    • Section: New Section
    • Section: 212
    • Section: 212
    • Section: New Section
    • Section: 212
    • Section: New Section
    • Section: New Section
    • Section: New Section
    • Section: New Section
    • Section: 212
    • Section: New Section
  • Chapter 151. Limited Sales, Excise, And Use Tax
    • Section: 3182
    • Section: 3182
    • Section: 3182
    • Section: 3182
  • Chapter 1. General Provisions
    • Section: New Section
    • Section: New Section

Latest SB2206 Activity

Companion Bills

TX HB4393

Same As Relating to a franchise tax credit for, and the application of sales and use taxes to, certain research and development expenses.

Similar Bills

TX HB51

Relating to measures to enhance and maintain the quality of state universities, including funding and incentives to support emerging public research universities, to the abolition of the higher education fund, to the institutional groupings under the Texas Higher Education Coordinating Board's accountability system, to the independent status of Lamar Institute of Technology, to research conducted by public universities and other state entities, and to the authorization of revenue bonds for certain institutions of higher education.

TX HB4393

Relating to a franchise tax credit for, and the application of sales and use taxes to, certain research and development expenses.

TX HB1000

Relating to state support for general academic teaching institutions in this state.

TX HB800

Relating to a sales and use tax exemption and a franchise tax credit related to certain research and development activities.

TX HB2943

Relating to a sales and use tax exemption and a franchise tax credit related to certain research and development activities of entities in the aerospace industry.

TX HB3853

Relating to biological and environmental research conducted on private land by a public or private institution of higher education and the eligibility of that land for appraisal for ad valorem tax purposes as qualified open-space land; authorizing a fee.

TX SB859

Relating to a sales and use tax exemption and a franchise tax credit related to certain research and development activities.

TX HB1595

Relating to the administration and investment of, and distribution and use of money from, certain constitutional and statutory funds to support general academic teaching institutions in achieving national prominence as major research universities and driving the state economy.