Business & Finance
Wed, November 5, 2025
Tue, November 4, 2025
Texas businesses will be able to exempt $125K of inventory from taxes
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Published in Business and Finance on Wednesday, November 5th 2025 at 0:06 GMT by KDFW🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source
What the Measure Proposes
At its core, HJR1 would exempt businesses that meet specific criteria from paying the franchise tax—a tax based on a company’s net taxable margin. The article outlines that eligible businesses must have an annual revenue of less than $500,000 and employ fewer than 10 full‑time workers. The exemption would apply for the fiscal years 2025 through 2028, giving these companies a four‑year window to grow without the incremental cost of the franchise tax. Once the exemption period ends, companies would revert to the standard tax formula.
The proposal also contains a “sunset” provision. If the measure is not renewed or replaced by subsequent legislation, it would automatically expire after the 2028 fiscal year. Proponents argue that this allows lawmakers to reassess the policy after the exemption period and adjust based on its fiscal impact.
Why the Measure Matters
Texas currently relies on the franchise tax as a significant source of revenue, especially for state programs in education, transportation, and public safety. The article explains that the Texas Comptroller’s office estimates the franchise tax contributes roughly $20 billion annually to the state budget. Exempting small businesses would reduce that revenue by an estimated $300 million to $400 million over the four-year period, according to the Texas Comptroller’s projections cited in the article.
Supporters of HJR1 claim the reduction in tax pressure will stimulate job creation and encourage entrepreneurship. They point to studies from the Texas Economic Development Council that suggest lower tax rates can lead to higher rates of new business formation and employment growth. They argue that small businesses—often the backbone of local economies—would benefit from increased capital available for hiring, equipment, and expansion.
Opponents, however, warn that the tax cut would deprive the state of much-needed revenue, potentially leading to cuts in public services such as schools and infrastructure projects. They also point out that the exemption could widen the tax gap between large corporations, which already enjoy lower effective tax rates due to various deductions, and smaller firms. A quote from a local school district superintendent, included in the Fox 4 News piece, emphasized that the measure could jeopardize funding for public schools in communities heavily reliant on small‑business tax contributions.
How the Measure Was Introduced
The article recounts that the measure was introduced by a group of small‑business owners who petitioned the Texas Legislature to consider a blanket franchise‑tax exemption for smaller firms. A brief summary of the legislative process is provided: the bill passed both chambers of the Texas Legislature in the spring of 2023 and was referred to the election committee to be placed on the ballot. The measure is officially identified as House Joint Resolution 1 (HJR1) in the Texas legislative record, which is why it carries that designation on the ballot.
Voter Guidance and Resources
Fox 4 News includes a sidebar that directs voters to additional resources for researching the measure. One link leads to the Texas Secretary of State’s election portal, where voters can find the full text of the ballot question and the official summary provided by the state. Another link directs readers to a local small‑business advocacy group’s briefing on the potential economic impacts. The article also links to a video interview with a state budget analyst who explains how the exemption would affect the state’s fiscal projections.
Broader Context
The article situates HJR1 within a broader national trend of states reevaluating tax structures to boost local economies. It cites examples from neighboring states that have implemented similar exemptions for small businesses, noting mixed results. While some states have seen measurable increases in job creation, others have struggled with significant revenue shortfalls that forced cuts to public services.
In conclusion, the Texas Business Tax Exemption measure (HJR1) is a contentious proposal that pits economic growth incentives against fiscal prudence. Voters in the November 2024 election will decide whether the potential benefits of reducing the franchise tax for small businesses outweigh the projected loss in state revenue and the possible downstream effects on public services. The Fox 4 News article urges readers to review the full ballot question, consult the provided resources, and consider how the measure aligns with their priorities for Texas’s economic future.
Read the Full KDFW Article at:
[ https://www.fox4news.com/election/texas-business-tax-exemption-hjr1-november-election ]
