Texas Franchise and Property Tax Relief

December 12, 2023
Aerial view of houses in Texas.

Key Takeaways

  • Owner-occupied homes may qualify for an increased homestead exemption of $100,000.
  • Companies doing business in Texas with annualized total revenues of $2.47M or less are under the “no tax due” threshold and do not need to file a report.
  • New veteran-owned businesses are no longer required to file a franchise tax report for the initial qualifying five-year period.

Texas voters recently passed property tax relief and franchise tax changes. The tax changes were initially passed by legislators under SB2 and SB3 and approved by voters. These bills include significant property tax relief for homeowners and notable franchise tax changes that will benefit businesses and individuals.

Property Tax and the Increased Homestead Exemption

The homestead exemption increased from $40,000 to $100,000. This effectively decreases the property tax base for owner-occupied homes.

Property tax rates were also reduced by $0.107, and appraisal increases are now capped at 20% for non-homesteaded properties worth up to $5M.

Franchise Tax

  • No Tax Due Revenue Threshold

Businesses with Texas activity under the gross receipts or tax liability thresholds (commonly known as the “no tax due threshold”) no longer need to file a no tax due report.

The bill also increases the gross receipts threshold from $1 million to $2.47 million. These changes are effective for franchise tax reports originally due on or after January 1, 2024.

Note that taxable entities with annualized total revenues less than or equal to the no tax due threshold must still file a Public Information Report or Ownership Information Report.

  • New Veteran-Owned Businesses

New veteran-owned businesses are no longer required to file a franchise tax report for the initial five-year period they qualify as new veteran-owned businesses. In addition, these entities do not need to file a Public Information Report or Ownership Information Report during the initial five-year period.

How We Can Help with State and Local Tax Compliance

Awareness and proactive planning can help prevent state and local income tax compliance issues. A trusted team can aid with sales tax collection responsibilities, state income tax nexus, and navigating ever-changing legislation. Our team of state and local tax professionals is here to help you minimize costs and reduce stress when doing business in your state.

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About the Author(s)

Melissa Menter Photo

Melissa Menter

Senior Manager
Melissa has over 20 years of experience helping clients with a broad range of tax issues. She has both Big Four and in-house Fortune 500 corporate tax experience, which gives her the perspective of being able to see a problem and its possible solutions from multiple angles. Melissa is a creative thinker and enjoys crafting customized, practical solutions to complex tax problems.