Lower franchise tax rates went into effect on January 1, 2016. H.B. No. 32 lowered the franchise tax rate for report years beginning in 2016 from 1% to 0.75% of taxable margin for most taxpayers. For retailers and wholesalers, the tax rate is decreased from 0.5% to 0.375%. H.B. No. 32 also favors businesses electing the E-Z computation and rate provisions. It raises the total revenue qualification threshold from $10 million to $20 million and lowers the E-Z tax rate from 0.575% to 0.331%. The Legislature’s stated intent is “to promote economic growth by repealing the franchise tax.” 84th Leg., R.S., H.B. 32 § 1(b).
H.B. No. 32 Sets New Franchise Tax Rates for 2016