TX SB2206

Creates a new franchise tax credit (Subchapter T) for qualified research and development expenses conducted in Texas, with a standard credit rate of 8.722% of expenses above 50% of the three-year average, or 4.361% for entities with no prior R&D history

Provides an enhanced credit rate of 10.903% (or 5.451% for new R&D entities) when taxable entities contract with public or private institutions of higher education for qualified research

Allows taxable entities that owe no franchise tax (due to revenue thresholds) to claim the credit as a refundable credit, with unused credits eligible for carryforward up to 20 consecutive reports

Limits the total credit claimed per report to 50% of tax due before other credits, and prohibits assignment of credits except when substantially all assets are transferred in the same transaction

Repeals the existing sales and use tax exemption for R&D (Section 151.3182) and the current R&D franchise tax credit (Subchapter M), effective January 1, 2026, while preserving carryforward of previously accrued credits