Business franchise taxes are overly complicated, are burdensome for Texas businesses, and prevent small and medium-sized businesses from flourishing .

Key points:

  • Because of the substantial costs, firms can often spend more on compliance than on paying the franchise tax itself.
  • Phasing out or repealing the business franchise tax can create thousands of jobs and add billions of dollars in new personal income.
  • In 2023, Texas state lawmakers passed legislation that doubled the amount of revenue exempt from the franchise tax—greatly expanding the number of businesses exempt altogether.