Texas SB 2206 made the state's R&D franchise-tax credit permanent and, effective Jan 1, 2026, raised the rate on qualified research expenses from 5% to 8.722% (10.903% for research with a Texas university). The credit is now refundable for firms owing under $1,000 in franchise tax or earning under $2.47M, but the old sales-and-use tax exemption on R&D equipment was repealed.
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Texas makes R&D franchise-tax credit permanent, raises rate to 8.722%
Why this matters for founders
Texas tech and hardware startups should shift R&D tax planning to the franchise-tax credit for 2026 filings and check whether they qualify for the new refundable path.
Source: Cherry Bekaert
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