BILL ANALYSIS Senate Research Center S.B. 7 By: Nelson et al. Finance 2/26/2015 As Filed
BILL ANALYSIS
Senate Research Center S.B. 7
By: Nelson et al.
Finance
2/26/2015
As Filed
Senate Research Center
S.B. 7
By: Nelson et al.
Finance
2/26/2015
As Filed
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT The franchise tax is computed at a rate of one percent taxable margin for most taxpayers and 0.5 percent of taxable margin for retailers and wholesalers. H.B. 500, 83rd Legislature, Regular Session, 2013, passed provisions reducing the tax rate to 0.95 percent for most taxpayers and 0.475 percent for retailers and wholesalers. However, these provisions expire on December 31, 2015. S.B. 7 reduces the franchise tax rate to 0.85 percent for most taxpayers and 0.425 percent for retailers and wholesalers, and makes those rate reductions permanent. As proposed, S.B. 7 amends current law relating to decreasing the rates of the franchise tax. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Sections 171.002(a) and (b), Tax Code, as follows: (a) Provides that, subject to Sections 171.003 (Increase in Rate Requires Voter Approval) and 171.1016 (E-Z Computation and Rate), and except as provided by Subsection (b), the rate of the franchise tax is 0.85 percent, rather than one percent, of taxable margin. (b) Provides that, subject to Sections 171.003 and 171.1016, the rate of the franchise tax is 0.425 percent, rather than 0.5 percent, of taxable margin for those taxable entities primarily engaged in retail or wholesale trade. SECTION 2. Provides that this Act applies only to a report originally due on or after the effective date of this Act. SECTION 3. Effective date: January 1, 2016.
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
The franchise tax is computed at a rate of one percent taxable margin for most taxpayers and 0.5 percent of taxable margin for retailers and wholesalers. H.B. 500, 83rd Legislature, Regular Session, 2013, passed provisions reducing the tax rate to 0.95 percent for most taxpayers and 0.475 percent for retailers and wholesalers. However, these provisions expire on December 31, 2015.
S.B. 7 reduces the franchise tax rate to 0.85 percent for most taxpayers and 0.425 percent for retailers and wholesalers, and makes those rate reductions permanent.
As proposed, S.B. 7 amends current law relating to decreasing the rates of the franchise tax.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Sections 171.002(a) and (b), Tax Code, as follows:
(a) Provides that, subject to Sections 171.003 (Increase in Rate Requires Voter Approval) and 171.1016 (E-Z Computation and Rate), and except as provided by Subsection (b), the rate of the franchise tax is 0.85 percent, rather than one percent, of taxable margin.
(b) Provides that, subject to Sections 171.003 and 171.1016, the rate of the franchise tax is 0.425 percent, rather than 0.5 percent, of taxable margin for those taxable entities primarily engaged in retail or wholesale trade.
SECTION 2. Provides that this Act applies only to a report originally due on or after the effective date of this Act.
SECTION 3. Effective date: January 1, 2016.