House Bill No. 4393 introduces Subchapter T to Chapter 171 of the Texas Tax Code, creating a franchise tax credit for specific research and development activities. The bill defines "qualified research expense" and sets eligibility criteria for taxable entities to claim a credit of 8.722% based on the difference between their qualified research expenses and 50% of their average expenses from the previous three tax periods. If entities collaborate with higher education institutions, the credit increases to 10.903%. The bill also allows for a refundable credit for those not required to pay the tax, includes provisions for combined reporting, limits on total credits claimed, and permits the carryforward of unused credits for up to 20 reports.

Additionally, the bill mandates the comptroller to deposit a portion of the revenue from the new tax into the property tax relief fund to mitigate any revenue decreases caused by the new subchapter. It repeals Section 151.3182 and Subchapter M of Chapter 171 while ensuring that tax liabilities incurred before the effective date remain enforceable. The new provisions will apply to reports due after January 1, 2026, and entities that received exemptions under the repealed section will not be eligible for credits under the new subchapter.

Statutes affected:
Introduced: Tax Code 171.212 (Tax Code 171)