Senate Bill No. 2747, introduced by Paxton, aims to establish limitations on agreements that provide rebates of municipal sales and use taxes or grants and loans based on those taxes. The bill introduces a new section, 321.006, to the Tax Code, which defines the terms and conditions under which municipalities or local government entities can enter into such agreements with retailers or their affiliated groups. Specifically, the bill stipulates that these agreements must result in a change to the economic position of the retailer beyond just tax benefits and that there must be a substantial purpose for entering into the agreement other than obtaining a tax benefit.

Furthermore, the bill empowers the comptroller to disregard the location of a business if it is determined that a municipality or local government entity has violated the new provisions. This includes revoking any sales tax permits issued for the location in question. The act is set to take effect on September 1, 2025, thereby providing a framework to ensure that sales tax incentives are used appropriately and do not solely benefit retailers at the expense of municipal tax revenues.

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