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2013-06-13

Legislature approves $710 million in tax relief

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In its regular session, the Texas Legislature approved sweeping tax reforms, passing a bill by Rep. Harvey Hilderbran that will offer $710 million in relief to Texas businesses.

House Bill 500 permanently exempts businesses that make less than $1 million from paying the margins tax, guarantees a $1 million deduction to all businesses and reduces the tax rate by 2.5 percent each of the next two years.

"One of my key goals this session was to provide meaningful, significant tax relief to small businesses. To do that, we had to make the margins tax exemption permanent, and I'm proud to say that we accomplished that goal," Hilderbran said.

The legislature first enacted the margins tax exemption for small business in 2009. Since its passage, Texas has led the nation in job growth. It has been named the friendliest state for small businesses and the "job creation capital" of the nation by numerous publications. That exemption was set to expire in 2014, however.

"I've heard firsthand from business owners that the margins tax exemption allows them to hire more workers and invest more in their communities," Hilderbran said. "The exemption has benefitted more than 29,000 businesses across the state, so letting it expire just wasn't an option."

In addition, Hilderbran's bill makes the tax fairer to all businesses by guaranteeing a $1 million exemption to those that gross over $1 million annually.

"The way the margins tax is set up now, a business could completely miss out on the exemption if they make just one dollar over that $1 million mark. Now, all small and medium companies are guaranteed at least a $1 million deduction," Hilderbran explained.

The legislation also reduces the margins tax by 2.5 percent for each of two years and includes provisions that ensure the "cost of goods" deduction is applied to most businesses equally.

HB 500 has moved to the governor's desk for signature.