The Texas State Senate gave the linen, uniform and facility services industry a huge win by passing State Sen. Adam Hinojosa’s (R-District 27) bill, SB 2774, by a vote of 29-2.
The bill amends the Texas Tax Code definition of “retail trade” to add trade activities involving the rental of industrial garments, linen supplies and related items that are classified as Industry 7213 or 7218 of the 1987 Standard Industrial Classification Manual.
Currently, the industry pays a 0.75% franchise tax rate, while other rental industries, like formal wear rental pays a lower 0.375%. SB 2774 would change the industry’s franchise tax rate to the lower 0.375%.
Allowing the linen, uniform and facility services industry to file at the lower rate would level an uneven field and free up much needed capital allowing the industry to expand to meet growing customer needs across the state, and employing more Texans.
During the Senate session, State Sen. Hinojosa emphasized the importance of this bill for businesses that provide essential services to various sectors, including healthcare, first responders and hospitality. He noted that the current classification system places an unfair tax burden on these businesses, which are crucial to the state’s infrastructure and economy.
The Texas State House has a companion bill, HB 1769, which was recently testified to in the Texas House Ways and Means Committee. The next step is to get committee passage then move the legislation to the House floor for a vote.
“There is a lot of momentum going our way in Texas right now, but there is a long way to go to get this across the finish line,” said Kevin Schwalb, TRSA’s vice president of government relations. “There are any number of things that can get in the way of passage; we need to continue working the process.
“Senate passage is an example of the importance of ‘shoe leather lobbying,’ which the TRSA members in Texas did during the Texas Legislative Day in March. It is a stark example of the importance of involvement.”
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