AUSTIN (May 8, 2013) – The Texas House of Representatives passed significant tax reform legislation today, approving a plan by Rep. Harvey Hilderbran, R-Kerrville, that will offer $667 million in relief to Texas businesses.
House Bill 500 permanently exempts businesses with gross revenues of $1 million or less from paying the margin tax. The current exemption is set to expire next year.
“We know this tax exemption results in business growth and job creation. I’ve heard firsthand from small business owners how the exemption has allowed them to invest more in the community and bring on new employees,” Hilderbran said. “It’s time to make it permanent.”
The legislature first enacted the margins tax exemption for small business in 2009. Since its passage, Texas has been named the friendliest state for small businesses, it has led the nation in job growth, and it was named the top state for businesses by numerous publications. In 2010, the U.S. Department of Commerce reported that Texas created more jobs than any other state, and the Wall Street Journal credited the state’s low taxes and employer-friendly environment with helping make Texas the “job creation capital” of the nation.
Additionally, Hilderbran’s bill extends the exemption to businesses grossing more than $1 million annually by creating a guaranteed $1 million deduction.
“A standard $1 million deduction means more tax relief for more small businesses,” Hilderbran said. “Right now, a business could completely miss out on the exemption if they gross just over that $1 million mark. Under my bill, everyone is guaranteed at least a million deduction.”
The tax overhaul also provides tax fairness by ensuring that the “cost of goods” deduction is offered to most businesses equally, not to just a few special interests. The bill changes how the tax is applied to specific industries, including businesses engaged in rental, auto repair, transportation, real estate and medicine.
The bill will now move to the Senate for consideration.