Austin, TX – In the 2nd called Special Session of the 88th Legislature in 2023, Senator Bettencourt (R-Houston) passed SB 2, which provided historic property tax reductions, and SB 3, which doubled the franchise tax exemption taking around 67,000 Texas small and mid-sized businesses (SMBs) off the franchise tax roll and eliminated the requirement to file a ‘No Tax Due’ form. SB 3 also eliminated the administrative burden of filing a ‘No Tax Due’ franchise tax return for 2.178 million SMBs. Senator Bettencourt was the author of SB 2 and SB 3, which were sponsored in the House by Representatives Myer and Geren, respectively, and passed the Senate unanimously and in the House by large margins.

“With SB 2 and SB 3, we were able to provide not only homeowners with tax savings but also our small and mid-sized businesses! SB 3 has doubled the franchise tax exemption eliminating franchise tax liability for about 67,000 small to midsize business owners. This exemption, combined with the elimination of filing burdens, creates huge yearly savings for our SMBs. Don't forget to check your franchise tax bill this year, because you might not have one!” stated Senator Bettencourt.

Franchise tax reports are due Wednesday, May 15th. Effective for reports due in 2024, taxable entities with total revenue at or below the 'No Tax Due' threshold are no longer required to file a Franchise Tax Report but must continue to file an information report each year.

Senator Tan Parker, the SB 3 joint author, emphasized the additional time and money businesses will be saving under the new law, stating: "We have given businesses across Texas an entire day of their time back by eliminating the burdensome administrative calculations and paperwork they would have had to file even with No Tax Due. These franchise tax savings, alongside one of the largest ISD tax rate reductions in Texas history, demonstrate the real and significant commitment the legislature has made to keep Texas the number one state for business in the country.”

SB 2 is providing non-homestead property owners an office estimated $4.2 billion per year of school district tax rate compression, and SB 3 is providing $300 million per year of franchise tax relief. This comes to a total of $4.5 billion per year in tax relief for Texas businesses and property owners.

"The benefits for franchise taxpayers are being realized alongside historical tax reductions in SB 2. In the six major urban counties, the reduction on the entire tax bill of cities, counties, and special districts looks to be between 16.6 to 33.7 pennies, and on just ISDs alone the changes look like the ISD tax rate reductions are between 13.4 to 17.1 percent. This is one of those rare situations where the state can provide tax reductions without shifting the property tax burden. Everyone wins!” concluded Senator Bettencourt.

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