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Summary: Currently the franchise tax rate for companies engaged in retail or wholesale trade is 0.5 percent of taxable margin, and one percent of taxable margin for electric utilities. Entities that primarily engage in retail or wholesale trade, but also provide retail electricity, pay the one percent rate for their entire taxable margin, not just for electricity sales. This effectively doubles their franchise tax liability, even though the provision of retail electricity represents only a small part of their revenue. HB 1735 would make the franchise tax rate of retail businesses that generate 5% or less of their revenue from retail electricity .5% instead of 1%.
Analysis: HB 1735 limits government and promotes the property rights of retailers that generate a small amount of revenue from retail electricity by allowing them to keep more of their resources.