SB2774

The bill adds one category to the Tax Code’s definition of retail trade: activities involving rental of industrial uniforms, industrial garments and industrial linen supplies classified in the 1987 Standard Industrial Classification manual as Industry 7213 or 7218. It does not change the rates themselves or automatically reclassify every laundry or dry-cleaning business. Final law, section 1.

Industry 7213 covers linen-supply rentals, while Industry 7218 covers industrial laundering and supply activities that can involve either rented items or customers’ own goods. The Texas amendment is narrower than every activity within those classifications: it specifically requires the described rental activities. Merely washing a customer’s own clothing does not become retail trade under this new rental category. Official 7213 description; Official 7218 description; Final law.

Existing eligibility conditions still matter. Retail/wholesale revenue must exceed revenue from other trades; a separate test generally limits revenue from selling products produced by the business or its affiliated group; and the entity must not provide retail or wholesale utilities. The standard franchise-tax rate is 0.75% of taxable margin, versus 0.375% for qualifying retail/wholesale businesses. No-tax provisions and an optional E-Z computation method can affect whether that comparison applies to a particular taxpayer. Existing rate and eligibility provisions; Alternative computation method.

The operative language is identical across the introduced, Senate committee, Senate-passed, House committee and enrolled texts. No floor amendments or conference version are listed. The delayed start follows the report’s original due date, not the date a late or extended report is actually filed. Text versions; Amendment index; Final law, sections 2–3.

Compare the published text versions in the official text index. A change is not attributed to a specific amendment here without a verified record.

Eligible rental businesses may owe less franchise tax under the lower rate, but the law does not guarantee a particular business a 50% reduction in its final bill or require savings to be passed to customers. Eligibility, taxable margin and the applicable calculation method still matter. Final law; Tax eligibility and rates.

The fiscal note estimates a $2.86 million revenue loss to the Property Tax Relief Fund in fiscal 2027, followed by $3 million in 2028, $3.13 million in 2029 and $3.27 million in 2030. It says those losses must be replaced with an equal amount of general revenue for the Foundation School Program. Its headline $0 general-revenue-related impact therefore does not mean the change has no public cost. These are estimates, not actual collections or a new appropriation; no local-government fiscal effect is anticipated. Fiscal note.