Texas Business and Property Owners Seeing $4.5 Billion Yearly Savings Thanks to SB 2 and SB 3

Austin, TX – In the 2nd called Special Session of the 88th Legislature in 2023, Senator Bettencourt (R-Houston) passed SB 2, which provided historic property tax reductions, and SB 3, which doubled the franchise tax exemption taking around 67,000 Texas small and mid-sized businesses (SMBs) off the franchise tax roll, and eliminated the requirement to file a ‘No Tax Due’ form. SB 3 also eliminated the administrative burden of filing a ‘No Tax Due’ franchise tax return for 2.178 million SMBs. Senator Bettencourt was the author of SB 2 and SB 3, which were sponsored in the House by Representatives Myer and Geren, respectively, and passed the Senate unanimously and in the House by large margins.

“The great news is that we are not only seeing homeowners benefit from property tax reduction, but also Texas business owners! SB 3 has doubled the franchise tax exemption eliminating franchise tax liability for about 67,000 small to midsize business owners,” stated Senator Bettencourt.

SB 2 is providing non-homestead property owners an office estimated $4.2 billion per year of school district tax rate compression, and SB 3 is providing $300 million per year of franchise tax relief. This comes to a total of $4.5 billion per year in tax relief for Texas business and property owners.

Senator Tan Parker, the SB 3 joint author, emphasized the additional time and money businesses will be saving under the new law, stating: “We have given businesses across Texas an entire day of their time back by eliminating the burdensome administrative calculations and paperwork they would have had to file even with No Tax Due. These franchise tax savings, alongside one of the largest ISD tax rate reductions in Texas history, demonstrate the real and significant commitment the legislature has made to keep Texas the number one state for business in the country.”

The benefits for franchise taxpayers are being realized alongside historical tax reductions in SB 2. 2023 actual data on the reduction in total tax rates in Texas’ largest counties is outlined in the chart below:

 

SB 2 Property Tax Rate Reductions by Urban County 2022 Tax Rate Total 2023 Tax Rate Total Difference of Property Tax Rates ISD Tax Rate Reduction ISD % Change
Bexar County Taxing Entities $ 2.70965 $ 2.49279 $ (0.21686) $ (0.2164) -15.1931%
Dallas County Taxing Entities $ 2.50038 $ 2.29478 $ (0.20560) $ (0.1711) -14.4396%
El Paso County Taxing Entities $ 2.96015 $ 2.76623 $ (0.19392) $ (0.1766) -13.4429%
Harris County Taxing Entities $ 2.24382 $ 2.01481 $ (0.22901) $ (0.1689) -16.2842%
Tarrant County Taxing Entities $ 2.59960 $ 2.26277 $ (0.33683) $ (0.2192) -17.1036%
Travis County Taxing Entities $ 1.97501 $ 1.80925 $ (0.16577) $ (0.1371) -13.7568%

 

“According to this chart, in the six major urban counties the reduction on the entire tax bill of cities, counties, and special districts is between 16.6 to 33.7 pennies, and on just ISDs alone the changes look like the ISD tax rate reductions are between 13.4 to 17.1 percent. It’s a great realization knowing that Texas renters will get to see savings passed down to them in declining markets. This is one of those rare situations where the state can provide tax reduction without shifting the property tax burden. Everyone wins!” concluded Senator Bettencourt.