The Texas Senator passed the bill unanimously on April 9, saying business owners will save nearly $500 a year on future tax bills.
Senate Bill 32 by Senator Paul Bettencourt of R-Houston exempts corporate personal property up to $25,000, including equipment, furniture and vehicles, from taxation. Texas business owners are currently exempt from assets under $2,500.
Less than a week later, Texas House approved a bill to raise tax exemptions to cover personal property for businesses under $250,000. The bill must be approved by both legislative units before it becomes law.
What you need to know
According to the Bettencourt office, the average Texas business pays a property tax rate of $2.20 per $100 taxable value. He said the expansion of the exemption will reduce corporate taxes by $495 a year from 2026 onwards.
If it passes both chambers of commerce, the business cuts will be featured in the November Texas voter vote as a constitutional amendment bill.
Companies with personal property under $25,000 will no longer have to pay taxes or submit related documents, Bettencourt said.
SB 32 creates a 20% tax credit for franchise taxes paid to business inventory. According to the Texas Taxpayers and Research Association, franchise taxes are similar to “privilege” fees for “business in the state.”
Texas lawmakers increased their annual state franchise tax exemption to $2.47 million in 2023, according to a previous Community Impact Report. Bettencourt said about 130,000 companies will pay franchise taxes in Texas, with about 59% benefiting from the proposed tax credit.
“The companies have been waiting for this for a long time,” Lt. Col. Dan Patrick said on the Senator’s floor on April 9th.
If SB 32 becomes law, the state would spend $700 million to help local governments cover the costs of tax cuts.
Please put it in perspective
According to the National Federation of Independent Companies, Texas is one of nine states that tax a company’s tangible personal property. In a news release on April 10, NFIB Texas encouraged lawmakers to complete plans to expand the exemption, but did not support any particular bill.
“The proportion of small business owners reporting taxes as their single most important issue is increasing,” NFIB Texas director Jeff Burdett said in the release. “It shows why it’s a challenge for local businesses to sell, add jobs and support the community.”
During the House of Representatives’ March 3 hearing on the proposed business tax exemption, Diego Galicia, chef and owner of San Antonio Restaurant Mixtli, said the increased taxes and costs that helped close more than 40 independent San Antonio restaurants in 2024 contributed.
“Every year, a lot of people don’t know this — we paid taxes on the equipment we use every day to run our restaurants and paid sales tax when we bought it,” Galicia said on March 3.
More Context
State lawmakers vowed the session to cut taxes further after passing the $18 billion property tax relief package in 2023.
In February, the Senate approved a proposal to raise the tax exemption for the Texans’ main housing complex to $140,000. In an interview on April 2nd, Patrick told Community Impact he wanted to raise the exemption for seniors to $200,000.
House lawmakers are considering legislation that will reduce district maintenance and operational taxes by approximately $0.10 per $100 taxable value. The bill was approved by a House committee in March, but has not reached the full room for discussion.
The regular 140-day legislative session will end on June 2nd.
