87R8743 BEF-D
By: Leman H.B. No. 3380
A BILL TO BE ENTITLED
AN ACT
relating to the franchise tax credit for certain research and
development activities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 171.651, Tax Code, is amended by adding
Subdivision (1-a) and amending Subdivision (4) to read as follows:
(1-a) "Production costs" include the cost of:
(A) materials;
(B) labor;
(C) supplies;
(D) pilot models; and
(E) products manufactured or produced.
(4) "Qualified research expense" has the meaning
assigned by Section 41, Internal Revenue Code, except that the
expense must be for research conducted in this state. The term
includes an expense described by Section 171.6515.
SECTION 2. Subchapter M, Chapter 171, Tax Code, is amended
by adding Section 171.6515 to read as follows:
Sec. 171.6515. QUALIFIED RESEARCH EXPENSES RELATING TO
RESEARCH INVOLVING PRODUCTION PROCESS. A taxable entity that
conducts qualified research for which the business component is a
production process may treat as a qualified research expense
production costs incurred while conducting that research,
regardless of whether the costs:
(1) include a taxable item exempted from sales and use
taxes under Section 151.318; or
(2) would have been incurred in the process if the
qualified research were not conducted.
SECTION 3. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 4. This Act takes effect January 1, 2022.