SB 2206 Makes Sure Texas’ Economy Keeps Pace with the Demands of the 21st Century
(Austin, TX) — Today, the Texas Senate unanimously passed Senate Bill 2206 by Senator Paul Bettencourt (R-Houston) on a bipartisan 31-0 vote. SB 2206 strengthens Texas’ commitment to research and development by increasing the R&D franchise tax credit from 5% up to 8.722% — and even higher to 10.903% for research conducted through public or private institutions of higher education.
Studies show that enhancing R&D incentives generates a strong return on investment. According to an economic study by Dr. John Diamond of the Baker Institute, for every $1 of foregone tax revenue from the R&D incentive, Texas gains $12.47 in gross state product (GSP) over a 20-year period. SB 2206 is projected to create 6,662 new jobs annually, $445 million in annual labor income, and $748 million in annual GSP growth.
Additionally, SB 2206 provides targeted relief and access to small businesses and veteran- owned businesses, allowing those who do not owe franchise taxes to still receive a refund of their earned credit. SB 2206 is designed to be revenue-neutral in the first biennium, replacing an inefficient sales tax exemption with a streamlined and more accountable franchise tax credit.
“Research and development are without a doubt powerful engines of economic growth and innovation,” Senator Bettencourt said. “SB 2206 ensures Texas remains a national leader on the global stage by promoting new technologies, supporting our universities, and driving high-paying job creation across the state.”
Texas is currently ranked 33rd in R&D investment as a percentage of gross state product despite being the nation’s second-largest economy. With roughly 29 other states already offering R&D credits — often at higher levels — SB 2206 ensures Texas stays competitive in attracting and retaining innovation-driven businesses.
Finally, SB 2206 ties the Texas credit more closely to the federal R&D credit under Section 41 of the Internal Revenue Code, reducing administrative burdens for both taxpayers and the Comptroller’s office, while allowing Texas to operate more efficiently and cost-effectively.
“I want to thank those who supported the bill like Samsung, Boeing, Exxon etc. and those who testified. Texas must invest in the future if we want to continue leading in the 21st century economy,” Bettencourt concluded.
Now, it’s on its way to the Texas House, where Representative Charlie Geren is carrying the companion bill, HB 4393
