SENATE APPROVES MILLIONS IN BUSINESS TAX CUTS

(AUSTIN) — Businesses look to save nearly three-quarters of a billion dollars under a plan passed Wednesday by the Senate that would allow them to write off 20 percent of the property taxes they pay on inventories. This credit would be applied against their franchise tax bill, and author and Houston Senator Paul Bettencourt said the measure, SB 32, would save business owners $500 million every fiscal year, and would benefit most business owners in the state. “There are approximately 130,000 franchise tax filers -we think approximately 59 percent – that have a retail or cost-of-goods-sold deduction that may be able to benefit from the inventory tax credit,” he said. Texas is one of only a few states to fully assess property taxes on business inventories.

The bill also raises the exemption for personal property owned by businesses, from a $2,500 exemption to $25,000. Bettencourt said this saves the average business in Texas about $500 a year. San Antonio Senator Roland Gutierrez, who owns a small law practice, said that the way the state assesses and collects this tax is onerous on small business owners. “Even to my law practice, that has a bunch of old computers, I have to pay taxes on those,” he said. “This is a bill that is going to help small business owners across the state.” In all, Bettencourt says the bill will save businesses $700 million in taxes this biennium. Voters must still approve the personal property tax exemption via a November vote on a constitutional amendment, but as with past propositions aimed at cutting taxes, Bettencourt says he expects more than 80 percent of Texans to vote in favor.

Wednesday’s measures were part of billions in property tax cuts included in the Senate proposal for next biennium’s state budget, but more could be on the way. At a press conference last Thursday, Lt. Governor Dan Patrick announced he is seeking to increase the homestead exemption even further for homeowners aged 65 and up. The Senate already passed a bill that would raise the amount of value a homeowner can write off before assessment from $100,000 to $140,000 for all Texans. Patrick said he is working with Governor Greg Abbott and Speaker Dustin Burrows to raise that even further for senior homeowners, up to $200,000. “That will remove almost every senior in the state of Texas – almost everyone – from paying any M&O [school] taxes,” he said. Since raising the exemption from $25,000 to $40,000 in 2017, Patrick said the Senate has approved more than $50 billion in property tax cuts.

Also Wednesday, the Senate passed a bill that would create a permanent revenue stream to support rural volunteer firefighting departments as they face increasing wildfire risk year after year. Midland Senator Kevin Sparks said it was these volunteers who held the line against the record-breaking panhandle wildfires last year as they burned across more than a million acres of land. His bill, SB 868, would take ten percent of the state’s VFD fund each year and direct it to rural fire departments in places that face increased risk of wildfire. “This will ensure that volunteer fire departments, which cover more than eighty percent of the state land receive the necessary resources to prepare for and respond to increasingly severe fire seasons,” said Sparks. The 2024 Smokehouse Creek wildfires were the largest ever seen in the state, burning more than a million acres in the Texas panhandle between February 26 and March 16, killing two and causing a billion dollars in damage.

The current structure, Sparks said, means that some departments are left waiting years for badly needed upgrades and new equipment. “Dedicating annual funding ensures these volunteer fire departments in high risk areas receive consistent support,” said Sparks. Zones designated high risk by the Texas A&M Forest Service include the entire panhandle and much of the high plains regions. The agency says they receive just over $16 million in annual funding into the volunteer fire service assistance fund but have more than $200 million in requests from across the state.

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