Proposed Historic Sales Tax Cut
TEXAS- House legislators announced a tax-relief package in April that would be a first in Texas- a lowered sales-tax rate. Since a 2% sales tax was first imposed in Texas in 1961, legislators have never cut the rate. While senators prefer to cut school property taxes, the House proposed trimming the state’s 6.25% sales tax rate back to 5.95%.
After local government adds their 2% tax, consumers would see a combined sales tax rate of 7.95%. For the average Texas family of 4, that’s a savings of around $170 a year, if this were to become effective January 1 as desired.
One of the things the House’s suggested tax-rate cut does not address is Texas’ higher than average property taxes. However, the Senate’s tax cut approach changes property tax exemptions from a fixed dollar amount to a percentage of the median home value. Both the Senate’s and the House’s plans offer cuts for business-franchise taxes, however the Senate’s plan offers more exemptions for small and medium sized businesses.
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