Atlanta, TX Advantages

Taxes

"One of the most business-friendly tax environments in the country!"

Scroll down for more information. Also contact: Comptroller of Public Accounts

NO Corporate Income Tax

NO Personal Income Tax

Corporate Franchise Tax

Corporations pay a franchise tax based on the amount of business they do in Texas. The tax base includes both the traditional net worth base, as well as a new earned surplus base. The earned surplus tax base is an adjusted federal taxable income. Firms can exclude foreign dividends from federal taxable income, but most firms must add back any amounts deducted from their federal return for compensation of officers and directors. Some firms with 35 or fewer shareholders may avoid the compensation add-back. The capital tax base has been slightly modified. Deferred investment tax credits and deferred income taxes are now included in calculating surplus. The law requires corporations to pay the tax on capital and any excess tax on earned surplus. The practical effect is that corporations will pay the higher of the tax oan capital of the tax on earned surplus. The capital tax rate is $2.50 per thousand. The tax rate on earned surplus is 4.5 percent. The gross receipts method of apportionment has been retained. The tax privilege period has been changed to a calendar year. Franchise tax reports are due to the Comptroller on May 15, with an extension to November 15 available.

Sales and Use Tax

Sales tax is collected for the sale, rental, and lease of tangible personal property and is based on sales price. The tax does not apply to sales for resale, leasing or renting. The companion use tax applies to storage, use or consumption of taxable items purchased, leased or rented in the state where sales tax has not been paid. It also applies to taxable items purchased out-of-state and used in state where no state sales tax was paid. The tax does not apply to items acquired outside the state that would be exempt from sales taxation. The use tax is based on the sales price of the property or rental/lease prices.

The rate is 6.25 percent for both taxes. A discount of ½ percent of the tax collected may be taken by the business taxpayer as reimbursement for collection. Taxpayers who estimate and repay the tax may deduct an additional 1.25 percent. Both taxes are administered by the Comptroller of Public Accounts.

Cities, towns, villages, municipal rapid transit authorities and regional transportation authorities may add to the tax rate up to a maximum combined state and local rate of 8.25 percent. Local taxes are subject to local voter approval. These local taxes are applied the same as state taxes and are administered by the Comptroller.

Property Tax

There is no State Property Tax in Texas. Local Property taxes are the primary source of income for all Texas school districts. Taxes are levied per $100 of assessed value. Assessments are based on market value.

Unemployment Tax

New Employers = 2.7% on first $9,000/wages per employee.

New employers who do not acquire an existing business start at a tax rate of 2.70 percent and continue to pay at this rate until the employer's account is chargeable with claims for unemployment benefits for four complete quarters. This period generally extends six calendar quarters from the date that first wages are paid, but can be as long as 8 quarters. At the end of this period and for each year thereafter, the employer's tax rate is computed based upon the amount of unemployment insurance benefits former employees receive along with a number of statewide factors. This computed rate is called the Employer's Effective Tax Rate:

Effective Tax Rate = General Tax Rate + Replenishment Tax Rate + Deficit Tax Rate + Smart Jobs Assessment.

Workers Compensation Rates

Workers Compensation Rates in Texas are determined by the following formula:

estimated payroll X classification rate = estimated annual premium

Other factors affecting premium include:

1. premium incentive for small employers;
2. experience modifiers,
3. schedule rating plan factor;
4. expense constant; and
5. premium discounts.

All workers' compensation policies are subjet to a final payroll audit that reflects the actual payroll and the actual premium developed on the policy in comparison to the estimated payrolls and the estimated premium and estimated policy cost calculated at the time the policy is issued.

The total payroll for each classification is multiplied by the insurer's filed rate for that classification (rate per $100 payroll) to determine premium. The employer's basic premium is the sum of the individual classification premiums. The minimum premium shall not exceed $250.00.