Pub 61 2020-2021 Issue 3

20 3 SE TAXES 15,139 AL TAXES 0,348 EL TAXES 12,191 HISE TAX 20,390 TION TAX 46,924 TION TAX 72,744 CE TAXES 53,397 CO TAXES 13,633 ES TAXES 21,869 ANCY TAX 02,524 TY TAXES 54,826 ER TAXES 64,439 , illion ptroller of to rounding. STAT E TAX COL L E C T IONS AND PE RSONAL INCOME F I SCA L 2011- 20 20 Cumulative Growth Rates State tax collections saw higher cumulative growth rates than Texas personal income from fiscal 2011 through 2014. Collections declined in 2016 due to franchise tax cuts and a slowdown in the oil and gas industries. Tax collections rebounded in 2018 due mostly to increased remittances from taxpayers in the oil and gas industries and rose moderately in 2019 as taxable spending in these industries plateaued. Some tax categories saw record year-over-year declines in fiscal 2020 collections due to the COVID-19 pandemic and a collapse in oil prices. The decrease in total tax collections would be even more substantial if not for sales tax revenue, which was buoyed by strong online sales and spending on building materials, home furnishings and sporting goods. Sources: Texas Comptroller of Public Accounts; U.S. Bureau of Economic Analysis 0% 10% 20% 30% 40% 50% 60% 2018 2019 2020 2017 2016 2015 2014 2013 2012 2011 47.7% 54% Tax Collections (All Funds, Excluding Trust) Personal Income Where Does Texas’ Tax Revenue Come From? While Texas is a relatively low-tax state, it relies on revenue generated by more than 30 different taxes to fund the functions of state government. Nearly all of this revenue is generated by the following major taxes: • Texas imposes a 6.25 % sales and use tax on sales, leases and rentals of goods as well as on taxable services such as telecommunications and amusement services. • Texas taxes motor vehicle sales at a rate of 6.25 % of the sales price minus any trade-in allowance. Motor vehicle rentals are taxed at 6.25 % or 10 % of gross receipts depending on the length of the rental contract. • Texas’ motor fuel tax rates can vary depending on the type of fuel; the two most common, gasoline and diesel, both are taxed at 20 cents per gallon. • The state’s franchise tax is imposed on certain kinds of businesses operating in Texas such as corporations, banks, limited liability corporations and partnerships. Of the millions of businesses across the state, only about 140,000 filers usually owe any franchise tax. • Texas’ severance taxes are imposed on entities that extract nonrenewable natural resources such as oil or natural gas. They are levied at rates of 4.6 % of market value for oil and condensate and 7.5 % of market value for natural gas. Revenues from these taxes are highly variable depending on market conditions. • The state’s insurance taxes include a number of premium taxes levied at rates ranging from 0.5 % to 4.85 % of gross premiums, as well as various maintenance taxes. • Texas’ “sin” taxes are levied on tobacco and alcoholic beverage products. The largest taxes in revenue terms are the cigarette tax, levied at $1.41 per pack of 20, and mixed beverage taxes, imposed on consumers at 8.25 % of the sales price and on business permit holders at 6.7 % of gross receipts. Continued from page 19 State Tax Collections and Personal Income FISCAL 2011-2020 Cumulative Growth Rates State tax collections saw higher cumulative growth rates than Texas personal income from fiscal 2011 through 2014. Collections declined in 2016 due to franchise tax cuts and a slowdown in the oil and gas industries. Tax collections rebounded in 2018 due mostly to increased remittances from taxpayers in the oil and gas industries and rose moderately in 2019 as taxable spending in these industries plateaued. Some tax categories saw record year-over-year declin scal 2020 collections due to the COVID-19 pandemic and a collapse in prices. The d cr ase in total tax c llections would be even more substantial if not for sales tax revenue, which was uoyed by strong online sales a d spe ding on building materials, home furnishings and sporting goods. Where Does Texas’ Tax Revenue Come From? While Texas is a relatively low-tax state, it relies on revenue generated by more than 30 different taxes to fund the functions of state government. Nearly all of this revenue is generated by the following major taxes: • Texas imposes a 6.25% sales and use tax on ales, leases and rentals of goods as well as on taxable services such as t lecommunications and amuse- ment services. • Texas taxes motor vehicle sales at a rate of 6.25% of the sales price minus any trade-in allowance. Motor vehicle rentals are taxed at 6.25% or 10% of gross receipts d pending on the length of the rental contract. • Texas’ motor fuel tax rates can vary depending on the type of fuel; the two most comm n, gasoline and diesel, both are t xed at 20 cents per gallon. • The state’s franchise tax is imposed on certain kinds of businesses operating in T xas such s corpora- tions, banks, limited liability corporations and partnerships. Of the millions of bu inesses across the state, only about 140,000 filers usually owe any franchise tax. • Texas’ sever nce t xes are imposed on entities that extract nonrenewable natural resources such as oil or natur l gas. They are levied a r tes of 4.6% of m rket value for oil and condensate and 7.5% of market value for natural gas. Revenues from these taxes are highly variable depending on market conditions. • The state’s insurance taxes include a number of premium taxes levied at rates ranging from 0.5% to 4.85% of gross premiums, as well as various maintenance taxes. • Texas’ “sin” taxes are levied on tobacco and al- coholic beverage products. The largest taxes in revenue terms are the cigarette tax, l vied at $1.41 per pack of 20, and mixed beverage taxes, imposed on consumers at 8.25% of the sales price and on business permit holders at 6.7% of gross receipts.