Submitted by Caitlin Glenn, Director of Credits & Incentives – KE Andrews Tax Consulting
As the 89th Legislative Session convenes, Texas lawmakers are prioritizing initiatives designed to create a more business-friendly climate for 2025. Key proposals aim at providing tax relief, boosting economic incentives, and introducing financial strategies that benefit both businesses and homeowners across the state. Several key bills center around tax reduction and incentive creation, including Senate Bill 1 (SB1), Senate Bill 4 (SB4), House Bill 1508 (HB1508), and House Bill 3291 (HB3291). These bills aim to implement targeted tax reforms that could significantly shape the economic landscape, providing businesses with more favorable tax structures, promoting job growth, and potentially stimulating consumer spending. If passed, these bills have the potential to drive economic growth and further strengthen Texas’ position as a leading state for business development.
SB1 – Business Tax Relief
Referenced in the Senate’s Budget for Texas, authored by State Sen. Joan Huffman (District 17), SB1 proposes allocating $500 million from the General Revenue Fund to provide tax relief for businesses. However, lawmakers are still discussing how these cuts will be implemented. As the General Appropriation Bill, this legislation will undergo several rounds of revisions before it progresses from the Senate Finance Committee to the Senate floor for a vote.
Both the Texas House and Senate have demonstrated a strong commitment to supporting targeted tax relief for businesses in 2025, with both governing bodies actively working to pass legislation that will ease the tax burden on businesses. This bipartisan support reflects a shared, business-friendly approach as the state looks to create a more favorable environment for businesses throughout the upcoming legislative session.
Texas has a rainy-day fund that is projected to have more than $28 billion, and the state’s budget has a nearly $24 billion surplus, which is money left over from the last budget cycle.
SB4 – Expanding Homestead Exemptions
As Chair of the Senate Committee on Local Government, State Sen. Paul Bettencourt (District 7) oversees SB4, which seeks to raise the homestead exemption from $100,000 to $140,000 for homeowners and $150,000 for seniors. This means eligible homeowners will see more of their home’s value exempt from school district property taxes, reducing their tax liability. With bipartisan support, the bill will ease property taxes while making sure schools do not lose funding. SB4 has already passed the state senate unanimously and is now headed to the state house for a vote. If passed, eligible homeowners could save over $500 a year—great news for local businesses, since more money in people’s pockets means more spending in the community.
HB1508 – Repealing the Franchise Tax
House Bill 1508 (HB1508), authored by State Rep. Will Metcalf (District 16), aims to repeal Texas’ franchise tax, currently mandated under Chapter 171 of the Tax Code. If passed, businesses subject to the tax as of December 31, 2025, will no longer be required to file franchise tax reports or remit payments. However, the Texas Comptroller will maintain the authority to audit and collect outstanding tax liabilities accrued before the repeal. Eliminating the franchise tax could reduce operational costs for businesses, improving Texas’ attractiveness as a business hub. HB1508 is in the early stages of the legislative process and will be allocated to the relevant house committee for further review.
HB3291 – Economic Development Incentives for Type A EDCs
Authored by State Rep. Cole Hefner (District 5) and filed on February 25, 2025, HB3291 aims to improve the financial viability of projects developed by Type A Economic Development Corporations (EDCs), authorized to use sales tax revenue to fund economic development projects. Currently, businesses leasing property from EDCs are subject to property taxation, which can be a significant burden on operational expenses. HB3291 proposes to designate properties owned by Type A EDCs and leased to private entities as serving a “public purpose,” making them exempt from ad valorem (property) taxes.
Eligible cities must have a population of at least 25,000 to form a Type A EDC, while counties with populations of 500,000 or more may also be eligible. This exemption would eliminate property tax obligations for businesses leasing from Type A EDCs, lowering operational costs. HB3291 aims to foster a more favorable environment for economic development, encouraging further investment in projects that benefit both the local economy and the state’s broader business climate.
HB9 – Texas Business Property Tax Exemption Bill
The Texas Business Property Tax Exemption Bill (HB9), sponsored by Rep. Morgan Meyer (R), aims to provide tax relief for businesses by increasing the exemption for tangible personal property. This bill, introduced on February 24, 2025, proposes raising the exemption from $2,500 to $250,000 for business-related personal property used to generate income. If passed, businesses will only need to report their taxable personal property if its value exceeds the new exemption threshold. The bill’s provisions are contingent on voter approval of a related constitutional amendment in November 2025. If approved, the changes would take effect starting with the 2025 tax year.
The Broader Economic Impact of Texas’ Tax Reforms
If passed, these bills would lead to lower tax liabilities for businesses and reduced property taxes for homeowners—key drivers of economic growth.
As the 89th Legislative Session advances, Texas remains focused on fostering a business-friendly environment. These measures will strengthen Texas’s economic foundation and position businesses of all sizes to thrive in 2025. As lawmakers refine these proposals throughout the legislative session, businesses, property owners, and economic developers should stay engaged to navigate the evolving financial landscape in Texas.
Caitlin Glenn leads a seasoned team of Credits & Incentives professionals with over 75 years of combined experience and industry knowledge. Since its inception, the KE Andrews Credits & Incentives Practice has saved companies over $2.5 billion. Caitlin’s team assists companies to maximize business incentives at the federal, state, and local levels. She specializes in decreasing the cost of capital for companies establishing new facilities, consolidating or expanding facilities, increasing employment, or incurring costs associated with sustainability and training.
Caitlin is a member of the KE Andrews Women’s Leadership Board, creating and implementing curriculum for professional women’s development to guide women through their careers, maximizing their potential and becoming leaders. Caitlin holds a business administration degree in Finance and Marketing from Texas Christian University and an MBA from the University of Texas at Dallas.
