Tax Policy News

The Texas Comptroller of Public Accounts is offering a temporary amnesty to unlicensed captive insurance companies – and their insureds – who want to voluntarily comply with insurance premium tax laws.

A captive insurer provides coverage only for its affiliated companies. Nonadmitted captive insurance companies – captive insurance companies that are not licensed under Insurance Code, Chapter 964 (Captive Insurance Companies) – are subject to the Unauthorized Insurance Premium Tax under Insurance Code, Chapter 226, Subchapter A. This tax is 4.85% of the gross premiums charged for insurance covering people, property, or activities located in Texas. If the captive insurer does not pay the tax when due, the insured also becomes jointly responsible for the tax.

The Comptroller’s office will notify certain franchise taxpayers that may be affiliated with a nonadmitted captive insurance company. You do not need to receive a notice to be eligible for this amnesty program. If you receive such a notice and are not affiliated with a nonadmitted captive insurance company, no further action is necessary.

The lookback period for this temporary amnesty will be four years and penalties and interest will be waived.

If you are an unlicensed captive insurance company – or are insured by one – and are interested in this temporary amnesty, please file Forms 25-108 and 25-123, Texas Annual Unauthorized Insurance Tax Report and its supplement, for insurance tax years 2022, 2023, 2024, and 2025. These years cover insurance written from Jan. 1, 2022, through Dec. 31, 2025. The forms must be filed by Dec. 31, 2026, to qualify for this temporary amnesty. The forms are available on our website at comptroller.texas.gov/taxes/insurance/forms.

If you have any questions, contact us toll free at 800-688-6829 or direct in Austin at 512-305-9899.

Since 1999, Texas shoppers have saved money during one weekend every August on the annual sales tax holiday.

The Comptroller’s office encourages you to support Texas businesses while saving money on tax-free purchases of most clothing, footwear, school supplies and backpacks (sold for less than $100) during the annual tax-free weekend. You can purchase qualifying items tax free from a Texas store or from an online or catalog seller doing business in Texas. In most cases, you do not need to give the seller an exemption certificate to buy qualifying items tax free.

This year’s sales tax holiday begins Friday, Aug. 7, and lasts through midnight Sunday, Aug. 9.

The sales tax exemption applies only to qualifying items you buy during the sales tax holiday. Items you buy before or after the sales tax holiday do not qualify for exemption or a tax refund.

See the following for additional information:

• Publication 98-490, Sales Tax Holiday.
• Publicación 98-490s, Fin de Semana Libre de Impuestos Sobre las Ventas.
• Texas Tax Code Section 151.326 – Clothing and Footwear for Limited Period.
• Texas Tax Code Section 151.327 – School Supplies and School Backpacks Before Start of School.

Franchise tax mandatory electronic payers seeking an extension to Nov. 16 to file their report must file a second extension request and pay any additional tax due by Aug. 17.

If you paid all the tax due with your first extension, use Webfile or submit Form 05-164, Texas Franchise Tax Extension Request (PDF) to request a second extension. If the amount you paid with your first extension does not cover 100 percent of the amount of tax due, you must pay the difference with your second extension request. Entities must electronically submit payment using the appropriate electronic payment method described below:

Webfile – Select the file extension option in Webfile and pay the difference, if any, between the amount paid with your first extension and 100 percent of the amount of tax that will be reported as due on the report filed on or before Nov. 16. You do not need to submit a paper Extension Request form if you select the file extension option in Webfile.

TEXNET – Select the extension payment option and pay the difference between the amount paid with your first extension and 100 percent of the amount of tax that will be reported as due on the report filed on or before Nov. 16. You do not need to request an extension in Webfile or submit a paper Extension Request form if you select the extension payment option in TEXNET.

For more information about filing and paying franchise tax, visit our franchise tax webpage.

The Comptroller’s office mailed invoices to insurers at the end of May for the Volunteer Fire Department Assistance Fund Assessment. Payment is due Aug. 1, 2026.

This assessment applies to property and casualty insurers writing homeowners insurance, fire insurance, farm and ranch owner’s insurance, private passenger auto physical damage insurance, commercial auto physical damage insurance and the non-liability portion of commercial multi-peril insurance.

The Motor Vehicle Crime Prevention Authority (MVCPA) Fee Report is due on Aug. 1, 2026.

Insurance companies that write any form of motor vehicle insurance in Texas must pay this fee. A $5 rate applies per each motor vehicle year for insurance policies written from Jan. 1 through June 30. Report the fee on Form 25-106, Insurance Motor Vehicle Crime Prevention Authority Semiannual Fee Report-January through June (PDF). Form 25-106 may be filed online through Webfile or by paper report and must be filed even if no fee is due.

The sales taxpayer search available on Comptroller.Texas.Gov has been updated to include API access, allowing businesses to download data for multiple taxpayer accounts. Our franchise tax account status search also has API access to the data.

It is important to review your taxpayer mailing address to be sure it is current. Without a current address on file, you will miss important tax information necessary to accurately file tax returns and/or refund requests. Even if you recently updated your address information it is important to verify it is accurate. Some email providers’ internal security systems occasionally block changes submitted to us for processing. You can verify your account information in our franchise tax account status search and our sales taxpayer search, both available on Comptroller.Texas.Gov. Log on to your Webfile account or visit our Change Mailing Address/Phone Number webpage to update your address online.

In 2025, the Texas Legislature passed Senate Bill 2018, which created a pilot program for a Strong Families franchise tax credit to encourage private sector donations to eligible nonprofits providing family-strengthening services. The credit is based on designated contributions made to eligible organizations during the previous calendar year, but not prior to June 1, 2026. The credit is awarded on a first-come, first-served basis, with the amount of credits awarded each year limited to $5 million in total and each taxable entity limited to $1 million.

Nonprofits that provide qualifying family-strengthening services must apply for certification as an eligible organization with the OneStar Foundation. To qualify for a Strong Families credit, a contribution must be designated as being made for purposes of the Strong Families credit at the time of the contribution and made to an organization that is certified as an eligible organization on the date of the contribution.

To implement the first-come, first-served nature of the credit, the Comptroller’s office is implementing a reservation system as follows:

• A taxable entity must apply to reserve a credit allocation through the Comptroller’s Webfile system and provide the amount of the proposed contribution in that application.
• Once a taxable entity is notified it has successfully reserved a credit allocation the entity must make the designated contribution within 30 days.

The credit reservation system for the first cycle of contributions will open at 9:00 am on Monday, Aug. 3, 2026.

A taxable entity that has successfully been awarded a credit by the Comptroller’s office may claim the awarded credit on its following year’s franchise tax report. The amount of credit a taxable entity may claim on its franchise tax report is limited to the amount of franchise tax due for the report after applying all other applicable credits. If the entity cannot claim the entire amount of credit awarded on its franchise tax report, the entity can carry the unused credit forward for not more than five consecutive reports.

See our Texas Strong Families Franchise Tax webpage for additional information.

The Comptroller’s office filed the following rule for adoption with the Secretary of State:

Franchise Tax

Rule 3.588 – Margin: Cost of Goods Sold

Publication date – June 12, 2026
Effective date – June 21, 2026

The Comptroller’s office adopted amendments to Rule 3.588 concerning margin: cost of goods sold. The amendments implement legislation that allow a taxable entity to include expenses in its cost of goods sold, as allowed under Section 171.1012, when paid for with qualifying grant proceeds received for broadband deployment in Texas or with qualifying loan or grant proceeds received for COVID-19 relief. Senate Bill (SB) 1243, 88th Legislature, 2023; SB 1405, 89th Legislature, 2025; and House Bill 1195, 87th Legislature, 2021. The amendments also clarify that the cost of goods sold provisions apply to television or radio broadcasting and provide a definition for television or radio broadcasting. SB 263, 89th Legislature, 2025. Lastly, the amendments address the franchise tax conformity to the Internal Revenue Code (IRC).

To see the latest items added to our State Tax Automated Research (STAR) system, use the New Documents link on the STAR home page in the blue menu bar.

The Monthly Updates Search Form defaults to the current month and “All Taxes.” Use the pull-down menu to choose a different month or a particular tax. Selecting “All Taxes” brings up the documents organized by tax type.

Order of Application of Franchise Tax Credits, STAR Accession No. 202604001M

In January 2025, Tax Policy issued guidance on the proper order for applying franchise tax credits and credit carryforwards when a taxable entity has more than one credit or credit carryforward available. This memo updates and replaces the previous policy memo, STAR Accession No. 202501001M (Jan. 3, 2025).

The updated memo incorporates the Subchapter T R&D credit, the Housing credit, and the Strong Families credit. The memo also revises the information relating to the tax limitation on research and development credits claimed in a report. The 50% tax limitation applies to each research and development credit (Subchapter O, Subchapter M, and Subchapter T) separately.

The Taxes webpage has links to:

• All Texas taxes and fees.
• Resources for taxpayers.
• Filing and paying taxes.
• Tax laws and rules.

Our Account Update Tools make it easy for you to:

• Change your address.
• Add a location.
• Close a location.
• Change return/email notifications.

The Comptroller’s office offers video tutorials on filing and paying sales tax through Webfile. View them on our Video Tutorials webpage.

Our office also offers virtual Sales and Use Tax Seminars conducted via Webex Events. New taxpayers are especially encouraged to attend these overviews of tax responsibilities for buyers, sellers, and service providers. For more information, visit the Taxpayer Seminars webpage.

Visit our Tax Training Resources webpage to:

• Find out more about our training resources.
• Register for upcoming webinars.
• View the Podcast and Webinar Archive sections for previous recordings.

The Practitioners’ Corner is a one-stop resource for information about filing and paying taxes, links to tax research sources and searchable databases.

• Tax Due Dates
• Holiday Schedule