HB 1769

AN ACT relating to the classification of certain entities as primarily

House Bill • Darby | Martinez Fischer

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Signed into Law

89th Regular Session

Jan 14, 2025 - Jun 2, 2025 • Session ended

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What This Bill Does

Modifies the classification of certain business activities under Texas franchise tax regulations, specifically updating how rental and leasing businesses are categorized. The legislation expands the definition of entities primarily engaged in retail trade to include various rental activities, such as apparel rental, tool and equipment rental, uniform and linen supply rental, and rental-purchase agreement services. These changes will affect businesses in these sectors by potentially altering their tax classification and obligations under the Texas franchise tax system, with the new rules taking effect on January 1, 2027.

Subject Areas

Taxation--Franchise Business & Commerce--General

Bill Text

relating to the classification of certain entities as primarily
engaged in retail trade for purposes of the franchise tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 171.0001(12), Tax Code, is amended to
(A)  the activities described in Division G of the
1987 Standard Industrial Classification Manual published by the
federal Office of Management and Budget;
(B)  apparel rental activities classified as
Industry 5999 or 7299 of the 1987 Standard Industrial
Classification Manual published by the federal Office of Management
(C)  the activities classified as Industry Group
753 of the 1987 Standard Industrial Classification Manual published
by the federal Office of Management and Budget;
(D)  rental-purchase agreement activities
regulated by Chapter 92, Business & Commerce Code;
(E)  activities involving the rental or leasing of
tools, party and event supplies, and furniture that are classified
as Industry 7359 of the 1987 Standard Industrial Classification
Manual published by the federal Office of Management and Budget;
(F)  heavy construction equipment rental or
leasing activities classified as Industry 7353 of the 1987 Standard
Industrial Classification Manual published by the federal Office of
(G)  activities involving the rental of
industrial uniforms, industrial garments, and industrial linen
supplies that are classified as Industry 7213 or 7218 of the 1987
Standard Industrial Classification Manual published by the federal
Office of Management and Budget.
SECTION 2.  This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 3.  This Act takes effect January 1, 2027.