Bill > HB1508

This bill proposes to completely repeal Chapter 171 of the Texas Tax Code, which governs the franchise tax, effective January 1, 2026. Under this legislation, businesses that were subject to the franchise tax as of December 31, 2025, will not be required to file a franchise tax report or pay taxes on their taxable margin for that period. However, the bill maintains provisions for ongoing tax administration, including allowing continued audits, addressing existing tax deficiencies, processing refunds, and pursuing any outstanding tax-related legal actions related to the franchise tax. The bill also preserves the state's ability to take administrative actions against businesses for franchise tax matters that occurred before the repeal, such as revoking corporate privileges or filing lawsuits, ensuring a smooth transition while protecting the state's legal and financial interests. Essentially, this bill eliminates the franchise tax for businesses in Texas starting in 2026, while ensuring proper closure of any existing tax matters.

Budget and Finance

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB1508