Texas State Tax Credits

More ways to save your hard-earned money from the tax man!

Texas has some great State Tax Credits for you....

Thank you so much for checking our resource out here for your state and congratulations for taking a proactive step to paying less in taxes. For your state, we have identified the tax credits that are currently being offered to help you pay less in state taxes.

We hope this resource is helpful to you, and if there is something you feel we have missed, please let us know!

It would be completely arrogant of us to think that we know all things and if we missed something we want to know so we can vet that and help you and our other friends in the entrepreneurial community pay less in taxes! And if you found this helpful, you should check out our DIY resources inside of our Tax Savings Communities (found at www.MakeTaxesFair.com/Our-Communities).

We're also ready to help you if you want to skip the line of the DIY process and get help directly from us. To learn more about how we help our clients check out www.MakeTaxesFair.com/Get-My-Roadmap

 
Texas

Texas Sales Tax Exemption or Franchise Tax Credit for Qualified Research

Overview:
Texas offers businesses engaged in qualified research the choice between a sales tax exemption on qualifying R&D equipment or a franchise tax credit based on qualified research expenses. These mutually exclusive incentives aim to boost innovation and economic growth within the state.

Who It’s For:
Texas businesses performing technological research and development that meets IRS Code Section 41(d) standards, including startups, manufacturers, and R&D-heavy companies.

Four Key Highlights:

  1. Choose One Incentive per Period
    Businesses can either claim a sales tax exemption on depreciable R&D property or a franchise tax credit for R&D expenses—but not both for the same period.

  2. Flexible Credit Options & Rates
    Standard franchise tax credit: 5% of incremental research expenses; up to 6.25% with higher education collaboration. Alternative credit: 2.5% or 3.125% if no R&D history in prior 3 years.

  3. Sales Tax Exemption Requirements
    Must register with the Texas Comptroller and file an Annual Information Report by March 31 each year. Exemption covers equipment with >1-year lifespan used in research.

  4. Generous Carryforward Window
    Unused franchise tax credits can be carried forward for up to 20 years, though annual claims are limited to 50% of the franchise tax due.

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