In a push to create new jobs and business incentives, Governor Greg Abbott just signed House Bill 32, a proposal lifting tax burdens on businesses. Born in March, the bill was approved by the House April 29th, approved in the Senate a month later on May 24th, and finally signed by the governor this week on June 15th. The bill was signed at Advanced Micro Designs, one of the top ten franchise tax payers in Austin, TX, as a sign that Texas rewards businesses for simply being Texan.
The bill includes a 25-percent, across-the-board cut in business-franchise tax rates. It also increases the revenue threshold for businesses who choose to be E-Z filers to $20 million, from $10 million. The E-Z filers’ tax rate declines to 0.331 percent of receipts, from 0.575 percent. The bill is expected to cost the state $2.56 billion over the next two years.
Another tax break introduced in the bill is the elimination of licensing fees for approximately 600,000 professionals. Even the average taxpayer will be impacted by this bill, as homeowners are expected to save about $125 per year just in property taxes. Big businesses are encouraged to put down roots in Texas with this bill– Abbott’s people are talking to GE’s people– but Abbott clearly had small businesses in mind too: “Overregulation is costly at any level, especially to small businesses.”
Here at Sweeten CPA, Michele was firmly in favor of the franchise tax cut. “That rate reduction will affect about 20% of my clients, who are currently subject to the franchise tax. Many of my small business clients are already beneath the threshold for the tax, and file a No Tax Due Return annually. But for those successful and growing firms who are over the $1,000,000 threshold for paying the Texas Franchise Tax, the 25% savings will be truly felt!”
[Find more about his speech summed up by the Texas Tribune here.]