Texas House Approves Legislation to Exempt Business Equipment from Taxes
Overview of the Legislation
AUSTIN — Business owners could exempt a quarter-million dollars worth of computers, furniture and other equipment from their annual taxes under legislation the Texas House overwhelmingly approved on Wednesday.
Rep. Morgan Meyer, R-University Park, brought forward the proposals that passed with 90% support in the GOP-dominated chamber. If the legislation passes the Texas Senate, voters will need to approve it in November for it to go into effect in this tax year.
Key Components of the Legislation
The measures — House Bill 9 and House Joint Resolution 1 — are the cornerstone of House Speaker Dustin Burrows’ priority property tax reform package for the House.
The bill provides “the second largest exemption of its kind in the country and will provide substantial savings to businesses across the state,” Meyer said.
Personal Property Tax Exemption
The legislation raises the personal property tax exemption for businesses from $2,500 to $250,000 — a tenfold increase in the amount of value that businesses owners don’t have to claim on items critical to their companies’ day-to-day operations.
Items that, supporters point out, owners already paid sales tax on when they purchased them. Avoiding a second round of taxes means they can put more into their families and businesses, said Rep. Mitch Little, R-Lewisville.
Benefits to Businesses and the Economy
“It’ll help them provide for their children, and that’s money that goes back into the economy,” Little said. “This bill helps those small businesses ensure that they can continue to operate those small businesses by accepting things that they already paid taxes on.”
Opposition to the Bill
About a dozen House members opposed the bill, arguing that local governments would have to make up the loss in revenue by raising prices for services — putting the tax cut for businesses on the backs of everyday Texans who may already struggle every day.
Rep. Nicole Collier, D-Fort Worth, said 82% of the businesses in Fort Worth would pay no taxes on personal business property at all if the exemption were increased to $250,000.
Response to Opposition
“This would have a huge loss to the city of Fort Worth, and it’s going to be a big burden to our taxpayers,” Collier said. “I’m trying to think of the other ways that they could make up the difference. Raising the water bill, raising garbage collection rates. These are all things that are passed on to the consumer.”
Meyer responded that if the cities can’t tighten their belts to make up for the lost revenue, that’s not the taxpayers’ problem.
“A lot of the local taxing entities are taking in way too much money as we speak,” he said. “They are taking it from our constituents, and so that would be something that they would need to deal with. But quite frankly, they take enough from our constituents as we sit here today.”
Conclusion
The legislation has been approved by the Texas House and will now move to the Senate for consideration. If it passes, voters will have the final say in November. The bill has the potential to provide significant savings to businesses across the state, but it also raises concerns about the impact on local governments and taxpayers.
Frequently Asked Questions
Q: What is the current personal property tax exemption for businesses in Texas?
A: The current personal property tax exemption for businesses in Texas is $2,500.
Q: How much would the exemption increase under the proposed legislation?
A: The exemption would increase to $250,000, a tenfold increase from the current amount.
Q: What types of items would be exempt from taxes under the legislation?
A: The legislation would exempt computers, furniture, and other equipment critical to a business’s day-to-day operations.
Q: How would the legislation affect local governments and taxpayers?
A: The legislation could result in a loss of revenue for local governments, which could lead to increased prices for services or higher taxes for everyday Texans.
