It's called House Bill 500, and it has already been approved by the House. If the Senate also approves the bill, it would result in $667 million in tax relief to small businesses in Austin, Texas.
House Bill 500 will permanently exempt businesses with gross revenues of $1 million or less from paying the margin tax. Marginal tax rates are tax rates set for income brackets. As income gets higher and moves into another bracket, the marginal tax rate will increase. What House Bill 500 will do is exempt businesses from having to pay the marginal rate, applying a standard deduction that will save them money. The purpose is to grow small business and create more jobs.
The bill will also change how the tax is applied to specific industries, including businesses engaged in rental, auto repair, transportation, real estate and medicine. The deduction is set to expire next year unless it is renewed through House Bill 500.
The deduction has played a significant role in Texas creating more jobs than any other state in 2010.
If House Bill 500 passes, tax relief will help Austin small business owners to the tune of $667 million over the next two years.
