HB 1508 would repeal Chapter 171 of the Texas Tax Code, which is the state franchise tax. The bill provides that a taxable entity subject to the franchise tax on December 31, 2025, would not have to file a franchise tax report or pay tax on taxable margin for that period. The repeal would take effect January 1, 2026.
The bill also preserves the state's ability to administer and enforce franchise tax matters that arose before repeal. Existing law would continue to apply to audits, deficiencies, redeterminations, and refunds for taxes due or collected under Chapter 171 until those matters are barred by limitations. It further states that the repeal does not disturb prior forfeitures, revocations, lawsuits, or receiverships, and it preserves the authority of the comptroller, secretary of state, and attorney general to pursue actions based on pre-repeal conduct, as well as the right of affected entities to contest those actions.
Impact
HB 1508 would eliminate the franchise tax prospectively, removing a major business tax imposed on taxable entities in Texas and ending future filing and payment obligations under Chapter 171. It would also repeal the statutory framework governing the tax, while leaving intact the legal machinery needed to resolve pre-existing liabilities, audits, enforcement actions, and taxpayer disputes tied to periods before January 1, 2026. Businesses organized as corporations, LLCs, partnerships, and other taxable entities would be directly affected, as would the comptroller and other state officials responsible for tax administration and enforcement.
Sentiment
The available record shows the bill was left pending in the House Ways & Means Committee, and there are no recorded votes or committee transcript excerpts to indicate broader debate. Based on the bill’s subject matter, it appears to be a significant tax-cut proposal that would likely be attractive to business interests and tax-reform advocates, while also reducing a state revenue source. Because no discussion snippets are provided, the formal record here does not show explicit support or opposition, only that the measure did not advance out of committee at the time reflected in the context.
Contention
The main point of contention is the policy choice to fully repeal the franchise tax, which would reduce state revenue and shift the tax burden away from businesses. Supporters would likely frame the bill as tax relief and a pro-business reform, while opponents would likely focus on the fiscal impact on the state budget and the loss of a broad-based business tax. A secondary issue is the transition from the current tax system to repeal, though the bill attempts to address that by preserving enforcement and dispute resolution for pre-2026 liabilities.
To Amend Laws Concerning The Corporate Franchise Tax; To Repeal The Arkansas Corporate Franchise Tax Act Of 1979; And To Require An Annual Report For Corporations.