Texas House Bill HB4393

Texas 2025 - 89th Regular

• Filed: 3/11/25

Caption

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

Impact

The implementation of HB4393 is expected to positively impact the state's economy by encouraging businesses and institutions of higher education to invest in research initiatives. By allowing taxable entities to claim a percentage of their qualified R&D expenses as tax credits, the bill aims to reduce the financial burden on companies conducting research in Texas. This could lead to increased employment opportunities in high-tech sectors and elevate the state's competitiveness in attracting innovative businesses and talent.

Summary

House Bill 4393 focuses on establishing a franchise tax credit designed to incentivize research and development (R&D) activities in Texas. This bill amends Chapter 171 of the Tax Code by introducing Subchapter T, which defines eligible research expenses and outlines the criteria for claiming tax credits associated with these expenses. The intent of HB4393 is to foster innovation by providing a financial incentive for entities engaged in R&D within the state, thereby potentially enhancing the state's economic environment.

Contention

While proponents of HB4393 argue that this measure will stimulate Texas's economy by boosting R&D, there are concerns regarding its financial implications. Critics may argue that the tax credits could lead to decreased state revenues, affecting funding for essential public services. Moreover, there may be debates regarding the adequacy of oversight in determining qualifying R&D expenses, which could result in inconsistencies and potential misuse of tax credits. Policymakers will need to carefully balance the benefits of supporting innovation with the need to maintain fiscal responsibility.

Texas Constitutional Statutes Affected

Tax Code

• Chapter 171. Franchise Tax
  • Section: 212
  • Section: New Section