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Texas Lawmakers’ Deal on Property Tax & Franchise Tax Cuts

Texas Gov. Greg Abbott has signed legislation to lower property and franchise taxes. Read on to see how taxpayers may be affected.
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As part of the 88th Texas legislative session, on July 22, 2023, Texas Gov. Greg Abbott signed much-anticipated legislation to lower property and franchise taxes. The franchise bill was contingent on the property tax relief bill being passed, and there was much contemplation on whether the governor would veto one or both of these bills.

Texas Senate Bill 2 proposes to reduce the school property tax rate for homeowners and business properties by 10.7 cents per $100 valuation. In addition, Texas’ homestead exemption will increase from $40,000 to $100,000, and for non-homesteaded properties valued at $5 million and under, appraisal increases will have a 20% temporary cap. A constitutional election will take place in November for approval, to be effective for the 2023 tax year.

Texas House Bill 3 amends the amount related to the total revenue exemption for the franchise tax and the exclusion of certain taxable entities from the requirements to file a franchise tax report. The bill will specifically amend that a taxable entity is not required to pay any tax and is not considered to owe any tax for a period if:

  1. The amount of tax computed for the taxable entity is less than $1,000; or
  2. The amount of the taxable entity’s total revenue from its entire business is less than or equal to $2.47 million for the 12-month period in which margin is based.

The bill also amends the requirement of a taxable entity to file an information report with the Texas Comptroller. The provisions of the bill will take effect on January 1, 2024.

If you have any questions or need assistance, please reach out to a professional at Forvis Mazars or use the Contact Us form below.


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