Senate Passes Historic Tax Relief Package for Homeowners and Businesses
AUSTIN – Today, Lt. Governor Dan Patrick commends the Texas Senate for delivering true tax relief for homeowners and businesses. Senate Bill 1(SB 1), Senate Joint Resolution 1(SJR 1), Senate Bill 7 and Senate Bill 8 (SB 7 & SB 8) passed out of the Senate floor with strong support.
“Rather than spend excess revenue, the Senate has voted to return $4.6 billion to Texas homeowners and businesses over the next two years,” said Patrick.
- SB 1/SJR 1 – Proposes to more than double the homestead exemption, saving the average homeowner $442 over the next two years. It will bring the first change and increase to the homestead exemption in nearly 20 years, and allow the exemption to automatically increase as home values rise. Collectively, Texas homeowners will save $2.154 billion over the next two years. SJR 1 will provide voters with the opportunity to place in the Texas Constitution a permanent ban on taxing real estate transactions, ensuring homeownership always remains attainable for Texans.
- SB 7 – Permanently reduces the franchise tax rate by 15 percent, saving businesses $1.43 billion over the next two years. SB 7, also reduces burdensome compliance costs for Texas’ small businesses by expanding eligibility for “EZ” franchise tax reporting. By doubling the amount of revenue allowed on “EZ” reports (from $10 million to $20 million) and reducing the “EZ” rate by 42 percent, Texas small businesses will save $283 million over the next two years.
SB 7 includes the Texas Franchise Repeal Act (as amended), putting Texas on a path to abolish the state franchise tax which was implemented in 2006. It instructs the Comptroller of Public Accounts to complete a 2-year study and report to the legislature how best to abolish the franchise tax and replace those revenues from existing sources.
- SB 8 – Supports Texas’ small businesses by exempting from the franchise tax all businesses with less than $4 million in revenue, completely eliminating franchise tax liability for more than half of all businesses currently paying the franchise tax. By quadrupling the current small business exemption (from $1 million to $4 million), SB 8 will exempt more than 61,000 small businesses from paying the franchise tax and save Texas’ small businesses $760 million over the next two years.