Texas House Bill HB 3830

Texas 2025 - 89th Regular

• Filed: 3/5/25
• Out of House Committee: 5/10/25

Caption

Relating to a franchise tax credit for certain watershed protection activities.

Summary

HB 3830 would create a new franchise tax credit in the Texas Tax Code for certain watershed protection activities tied to concentrated animal feeding operations (CAFOs). To qualify, a taxable entity must operate a permitted CAFO located in a major sole source impairment zone and transport agricultural waste out of that zone for disposal, use, or application at a waste management unit or waste application field outside the zone. The credit is based on the taxpayer’s costs for fuel, labor, and equipment used to move the waste. The bill caps the credit so that, together with any carryforward, it cannot exceed 50 percent of the franchise tax due after other credits. Unused credit may be carried forward for up to 10 consecutive reports, but the credit generally cannot be transferred or assigned except in a transaction involving substantially all of the taxpayer’s assets. Taxpayers must apply with their franchise tax report and provide information requested by the comptroller, who must also adopt implementing rules and forms and report credit usage to the legislature and governor. HB 3830 would amend Chapter 171 of the Tax Code by adding a new subchapter establishing the credit, defining key terms by reference to the Water Code and administrative rules, and setting an expiration date of December 31, 2035. The credit would apply only to reports originally due on or after the bill’s effective date, which is January 1, 2026. The bill would therefore create a targeted tax incentive for waste-removal practices intended to reduce watershed contamination in sensitive areas. The available context shows no recorded committee testimony or floor votes, so there is no direct evidence of formal support or opposition in the provided materials. Based on the bill’s structure, the likely policy rationale is environmental protection and water quality improvement, while any concerns would likely center on the fiscal cost of the credit, the administrative burden of verifying eligibility and costs, and whether the incentive is narrowly targeted enough to justify a tax expenditure.

Impact

The bill would add a new franchise tax credit to Chapter 171 of the Tax Code for eligible CAFO operators that remove agricultural waste from major sole source impairment zones. It would affect taxable entities operating under Water Code permits in those zones, the comptroller’s administration of franchise tax credits, and state revenue by reducing franchise tax liability for qualifying costs, subject to a 50 percent cap and a 2035 sunset.

Sentiment

No committee transcripts or votes were provided, so the bill’s recorded sentiment is limited. The measure appears policy-driven and targeted, with an environmental and agricultural management purpose, and there is no evidence in the supplied record of organized opposition or amendment debate. The absence of votes or hearing remarks means support or concern cannot be quantified from the provided materials.

Contention

Because there are no transcripts or votes, no specific points of contention are documented in the record provided. Potential areas of debate, based on the bill text, would likely include whether a franchise tax credit is the best tool for watershed protection, whether the benefit is too narrow or too generous for CAFO operators, and how the comptroller would verify qualifying transport costs and eligibility in impairment zones.