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|Has keywords=Texas, franchise tax, small businesses
|Has project status=Active
|Has notes=Sources: Texas Taxpayers and Research Association (TTARA), NOLO
}}
The Texas Franchise Tax []
=SummaryOverview=
==History==
===What is the Texas Franchise Tax?===
The Texas Franchise Tax , commonly known as the "margin" tax, is a business tax that has been in place in Texas since the 1880s. Businesses are required to pay this tax as a fee to the state in return for liability protections under state law that allow them to be legal, separate entities from the state. For most of the 1900s, the amount paid by the business depended on its net taxable capital (taxable capital gain minus loss, such as debt). But in 1991, the franchise tax was changed to include "earned surplus," which not only includes company profits but also compensation for directors and officers.
===Changes to the Franchise Tax in 2006===In 2006, Texas lawmakers made radical changes to the Franchise Tax in an attempt to raise revenues. According to the Texas Taxpayers and Research Association (TTARA), the franchise tax was rewritten with following policy goals in mind:*[[align the tax with a modern economy]]=Effect on Small Businesses=*[[create a simpler business tax]]This new *[[eliminate tax significantly affects small businesses planning opportunities]]*[[raise roughly $3 billion in new state revenue annually]]Before these sweeping changes, the franchise tax only applied to corporations and limited liability companies (LLC). After 2006, the tax extended to partnerships and professional associations
