Texas Governor Greg Abbott has signed into law a House bill permanently reducing the state franchise tax by 25 percent effective Jan. 1, 2016.

The bill reduces the franchise tax rate to 0.75 percent for most taxpayers and 0.375 percent for retailers and wholesalers, down from 0.95 percent and 0.475 percent, respectively.

The bill also reduces the franchise tax rate on EZ computations from 0.575 to 0.331 percent and raises the revenue threshold for these computations to $20 million. The legislation could lead to further reductions to the franchise tax rate beginning in 2018 if certain state tax collections exceed biennium appropriations.

Source: Wolters Kluwer