Bill > SB2206

This bill creates a new franchise tax credit for research and development (R&D) expenses conducted in Texas, allowing businesses to claim a credit ranging from 4.361% to 10.903% of their qualified research expenses, depending on specific conditions. The credit is calculated by comparing current R&D expenses to a three-year average, with a higher percentage rate available if the research is conducted in partnership with public or private higher education institutions. Businesses can carry forward unused credits for up to 20 consecutive reporting periods, though the total credit claimed in a single report cannot exceed 50% of the tax due before other credits. The bill also amends existing tax code provisions to define "qualified research expenses" using Internal Revenue Service Form 6765, and allows businesses to use statistical sampling methods to determine these expenses. Additionally, the bill provides a mechanism for businesses that do not owe taxes to still receive a refundable credit for their R&D expenses. The legislation repeals previous tax provisions related to research expenses and will take effect on January 1, 2026, with specific restrictions on eligibility for businesses that previously received certain tax exemptions.

Budget and Finance

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=SB2206