(a) A franchise tax is imposed on each taxable entity that does business in this state or that is chartered or organized in this state.
(b) The tax imposed under this chapter extends to the limits of the United States Constitution and the federal law adopted under the United States Constitution.

(c) The tax imposed under this section or § 171.0011 is not imposed on an entity if, during the period on which the report is based, the entity qualifies as a passive entity as defined by § 171.0003.

Text of subsection effective until January 01, 2026

(d) Notwithstanding Subsection (a), the tax imposed under this chapter is not imposed on a taxable entity that qualifies as a new veteran-owned business as defined by § 171.0005 until the earlier of:
(1) the fifth anniversary of the date on which the taxable entity begins doing business in this state; or
(2) the date the taxable entity ceases to qualify as a new veteran-owned business as defined by § 171.0005.

Text of subsection effective on January 01, 2026

(d) Repealed by Acts 2021, 87th Leg., R.S., Ch. 859 (S.B. 938), Sec. 9(3), eff. January 1, 2026.