Texas House Bill HB4425

Texas 2019 - 86th Regular

Caption

Relating to the exemption for depreciable tangible personal property used in qualified research from the sales and use tax and the tax credit for certain research and development credit activities for franchise tax purposes.

Impact

The proposal modifies existing laws regarding exemptions and credits for businesses in the research sector. By defining 'qualified research' specifically in accordance with the Internal Revenue Code while also mandating that the research must occur within Texas, the bill strengthens economic incentives for companies to operate in the state. Furthermore, it offers a nuanced approach to determining qualified research expenses, making the tracking and claiming process more streamlined for eligible entities. The expected result is an increase in research activities and partnerships with local educational institutions, potentially leading to job creation and economic growth.

Summary

House Bill 4425 introduces an amendment to the Texas Tax Code that focuses on providing a sales and use tax exemption for depreciable tangible personal property utilized in qualified research. The bill aims to support businesses engaged in research activities by removing financial burdens related to taxes on equipment essential for their operations. This measure seeks to encourage more companies to conduct research within Texas, fostering a climate that champions innovation and technological advancement.

Contention

Notable points of contention surrounding HB4425 include concerns from various stakeholders regarding how the defined criteria for qualified research may affect smaller businesses or startups that may not have the resources to meet the stringent requirements set forth in the bill. Additionally, opposition may arise from those who believe that the bill could disproportionately benefit larger corporations with substantial research budgets over smaller enterprises. This disparity in opportunities could result in a less competitive market environment, as smaller entities might struggle under the increased regulatory and fiscal requirements imposed by the revisions.