H.B. No. 1607
AN ACT
relating to a deduction under the franchise tax for certain
contracts with the federal government.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature finds that:
(1) Texas is an epicenter of this nation's aerospace,
aviation, defense, and military industries;
(2) with NASA's Johnson Space Center in Houston, the
new Army Futures Command, 15 active military bases across the
state, and major military aircraft manufacturing and maintenance
operations, the Texas economy and our nation's aerospace and
defense capabilities are inextricably linked;
(3) these crucial industries employ tens of thousands
of Texans and support dozens of our communities across the state;
and
(4) it is therefore paramount that state tax policy
foster a competitive economic climate to ensure growth and
retention of jobs related to the development, manufacture,
maintenance, and ongoing services for military hardware, aircraft,
spacecraft, and weapons systems used by and produced for our armed
forces, related federal government agencies, and our global allies.
SECTION 2. Section 171.101, Tax Code, is amended by adding
Subsections (e) and (f) to read as follows:
(e) For purposes of Subsection (f), "aerospace costs" means
any costs not already subtracted under Subsection (a)(1)(B)(ii)(a)
that are properly allocated and incurred under the Federal
Acquisition Regulation (48 C.F.R. Chapter 1) and subject to the
requirements of 48 C.F.R. Chapter 2 or Chapter 18 for contracts, or
subcontracts supporting those contracts, for the sale of goods or
services to the federal government by a taxable entity in the
aerospace industry that is engaged in activities described by North
American Industry Classification System code 334511, 3364, 3399,
5413, 5415, 5416, or 5419. For purposes of this subsection, a
reference to a federal regulation includes a successor regulation.
(f) In computing the sum for purposes of Subsection
(a)(1)(B)(ii), a taxable entity may add to other amounts described
by that subparagraph:
(1) for a report originally due on or after January 1,
2020, and before January 1, 2021, 20 percent of aerospace costs;
(2) for a report originally due on or after January 1,
2021, and before January 1, 2022, 40 percent of aerospace costs;
(3) for a report originally due on or after January 1,
2022, and before January 1, 2023, 60 percent of aerospace costs;
(4) for a report originally due on or after January 1,
2023, and before January 1, 2024, 80 percent of aerospace costs; and
(5) for a report originally due on or after January 1,
2024, 100 percent of aerospace costs.
SECTION 3. This Act takes effect January 1, 2020.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1607 was passed by the House on May
10, 2019, by the following vote: Yeas 126, Nays 6, 1 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 1607 was passed by the Senate on May
20, 2019, by the following vote: Yeas 28, Nays 3.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor