The Texas House of Representatives has passed a bill that will allow small businesses to claim state franchise tax exemptions for income up to $1 million, at least temporarily.
House Bill 4765, joint-authored by Ken Paxton (McKinney), Bill Callegari (Katy), and Brandon Creighton (Conroe), temporarily raises the total revenue exemption from $300,000 to $1,000,000 for tax reports due in 2010 and 2011 (tax years 2009 and 2010 respectively), according to the published House analysis of the bill. After that period, the total revenue exemption returns to $300,000.
The bill’s authors say 230,000 additional businesses will now qualify to exempt from paying the margins tax. The margins tax was passed in 2006 and has hit small businesses the hardest.
“The timing of the new margins tax on Texas business could not have been worse: tax bills came due right as the economy began to worsen,” says Rep. Callegari. “By raising the revenue exemption, small businesses will get some needed relief to help deal with the terrible aftershocks of the economic crisis.”
The House reports that the direct impact of the bill is a revenue loss to the property tax relief fund of $172,123,000 for the 2010-11 biennium. Any loss to that fund will have to be made up with general revenue of the same amount to fund property tax relief, the House analysis noted.
Source: Texas Legislature, www.capitol.state.tx.us/
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