State fiscal tax collections in line with projections
Special to The Leader
Texas Comptroller Glenn Hegar said recently that state franchise tax revenue collections as of the annual May 15 deadline totaled $4.12 billion.
“These collections remain in line with projected franchise tax revenues presented as part of the Biennial Revenue Estimate,” Hegar said. “Growth in business activity and the resulting tax revenue is an encouraging sign for the Texas economy, and we remain cautiously optimistic as we move into the last quarter of the fiscal year.”
Hegar added that more tax payments are expected to filter in after the formal deadline.
In 2015, more than 350,000 franchise tax filers took advantage of the Comptroller’s online WebFile tool.
“As part of our efforts to improve customer service and increase efficiency, we worked hard to educate filers on this easy-to-use online tool,” Hegar said. “And it’s paid off. We saw a 15 percent jump in online filing for the year.”
The state’s franchise tax is levied on business entities such as corporations, partnerships, limited liability companies and other forms of business. Franchise tax liability is based on “margin,” defined as a business’ total revenue minus one of four possible deductions. This margin then is multiplied by the percentage of the firm’s business revenues earned in Texas during the year.
The 2013 Legislature reduced franchise tax rates for the 2014 and 2015 filing years. These rate reductions, coupled with other changes, resulted in only slightly lower franchise tax collection through May 15.
“Texas businesses continued to thrive in 2014, and these revenues reflect that,” Hegar said. “We will continue to carefully monitor all sources of state revenue.”
In terms of its contributions to the state’s tax revenues, the franchise tax is second in size to the sales tax. In fiscal 2014, the franchise tax generated 9.3 percent of the state’s total tax collections, while the sales tax accounted for almost 54 percent.