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Texas Comptroller Carole Keeton Strayhorn announced a tax calculator available on the comptroller’s Web site that will allow Texas businesses to estimate how much franchise tax they will pay as a result of recent tax reforms.
“I urge every businessman and businesswoman to use this useful tool to estimate their potential franchise tax liability the Governor has signed into law,” Strayhorn said.
She added that most businesses will begin paying the tax in may 2008, but that some started being assessed on June 1, 2006.
The new Franchise Tax Calculator is designed to give businesses an idea of what their franchise tax liability will be – especially those businesses that are not familiar with this new margin tax concept.
The tax calculator takes basic information provided by the businesses and automatically calculates the estimated tax. Results will vary from industry to industry and businesses within the same industry depending on specific financial data.
For example, a small manufacturer that had gross revenue of $10 million last year will see a 50 percent increase in taxes, from $21,400 under the old franchise tax to $32,000 a year under the new tax plan.
A convenience store that had $10 million in gross revenue last year will see a 207 percent increase in taxes, from $3,740 under the old franchise tax to $11,500 a year under the new tax plan.
A dry cleaner, considered part of the service industry and not subject to the old franchise tax, with $1 million in gross revenue last year paid no taxes, will now pay $6,120 a year under the new tax plan.
Strayhorn, who is running for governor as an independent candidate, has been openly critical of the tax reforms, which were pushed by Gov. Rick Perry and were recently approved in a special session of the Texas Legislature.
“To use the tax calculator, a business owner will have to know their annual business gross revenue and the cost of doing business in either cost of goods purchased for resale or payroll,” Strayhorn said.
Source: Texas Comptroller’s Office