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Texas Senate proposed $4.6 billion in tax cuts
Homestead Exemption. Current exemption is $15,000. Proposed exemption is 25% of
market value - today’s market average equals $33,625
Franchise Tax. Lowers the Franchise Tax rates by 15%
Small Business Exemption. Increase the Small Business Tax Exemption from
$1 million gross to $4 million. If your business grosses less than $4 million you do not
pay the Franchise Tax.
Lieutenant Governor Dan Patrick endorses tax cuts of $4.6 billion
AUSTIN — Lt. Gov. Dan Patrick and most of the Senate upped the political ante on cutting
taxes Tuesday, endorsing a plan to provide $4.6 billion in business and property tax relief,
$600 million more than previously announced.
The tax cut package consists of three bills:
One by Senate Finance Committee Chair Jane Nelson, R-Flower Mound changes how the
school homestead property tax exemption is calculated. The exemption now is $15,000.
Nelson’s bill changes the exemption to equal 25 percent of the median home market value in
Texas. With the median home in Texas valued at $134,500, Nelson said the exemption would
be $33,625 per homestead. The change would result in $2.4 billion in property tax relief in
2016-2017.
Nelson and Senator Charles Schwertner, R-Georgetown introduced bills to cut the business
franchise tax 15 percent. The bills would exempt businesses with $4 million or less in annual
revenues from paying the tax. Under the current law, the businesses with $1 million or less in
yearly revenues are exempted. With the change, 52 percent of Texas businesses would not
have to pay the franchise tax thus providing meaningful tax relief to small and medium-sized
businesses. These cuts are projected to save business owners more than $2 billion.
Bill Hammond, CEO of the Texas Association of Business, called the plan “a strong starting
point”. and called for the Legislature to consider eliminating the inventory property tax on
business to boost manufacturing.
“We would like to see further rate reduction of the franchise tax rather than increasing the
number of businesses that are exempt,” he said.