Finance Committee advances R&D credit and aviation exemptions; several tax bills left pending

The Senate Committee on Finance on May 20, 2025, advanced several bills and heard testimony on a range of tax and policy proposals, including an extension and restructure of the state research-and-development tax incentive, an exemption for some general‑aviation maintenance parts, and a pilot tax credit to encourage private donations to family‑strengthening nonprofits. Committee members voted to report multiple measures favorably to the full Senate and left other measures pending for further work.

The most prominent item was Senate Bill 2206, which would extend and revise the state R&D tax incentive by tying the franchise tax credit more closely to the federal R&D credit (Internal Revenue Code §41) and by changing the program’s administration. Proponents from business and higher‑education organizations told the committee the change would make Texas more competitive for R&D projects and simplify administration. Witnesses included Jennifer Rabe of the Texas Taxpayers and Research Association, Tony Bennett of the Texas Association of Manufacturers, John Diamond of Rice University’s Baker Institute, and Glenn Hamer of the Texas Association of Business. The committee voted to report SB 2206 favorably to the full Senate (10 ayes, 0 nays).

The panel also reported Senate Bill 1030, which would exempt certain aircraft parts used in maintenance, repair and overhaul (MRO) for general aviation aircraft from sales and use tax. Industry witnesses and local airport representatives said neighboring states already provide similar exemptions and that MRO work was leaving Texas because of the tax treatment. McKinney National Airport and regional economic development representatives testified on the potential job and economic impacts of attracting MRO facilities. The committee reported SB 1030 favorably (10 ayes, 0 nays).

Senate Bill 2018, a two‑year pilot establishing a Strong Families Tax Credit to incentivize business donations to qualifying nonprofits that provide family‑stability services, also moved forward (reported favorably, 10–0). Testimony in support came from Family First, Buckner International and other nonprofit providers describing programs focused on economic stability and fatherhood engagement.

The committee approved statutory and administrative changes for the Opioid Abatement Fund Council in Senate Bill 1901, designed to clarify conflicts of interest, permit staggered terms, and permit reallocation of funds when local governments decline settlement distributions; SB 1901 was reported favorably (9–0 when recorded). Committee members said the bill aimed to improve the council’s ability to award grants promptly and to codify prior attorney‑general guidance.

The committee also considered several tax measures left pending for further work. Senator Hall presented Senate Bill 935, which would exempt counties from the state motor fuels tax on fuel sold in a county and used exclusively in county vehicles; Cass County Judge Travis Ransom testified that Cass County burns roughly 100,000 gallons of on‑road fuel annually and estimated the county would save about $20,000 a year under the exemption. The committee took public testimony and left SB 935 pending.

Senate Bill 2020, a proposal to repeal the so‑called “rehab tax” on nonresidential building renovations, drew testimony from builders, architects and contractors who said the tax penalizes reuse and urban reinvestment; the Legislative Budget Board’s preliminary fiscal note estimated a large cost to the state, and the committee left the bill pending. Similarly, Senate Bill 214, a proposal for a temporary sales‑tax holiday on qualifying residential HVAC systems, received a brief layout and was left pending.

Separately, the committee considered repeal of the Texas Research Incentive Program (TRIP) and use of contingency funds to clear a backlog of certified but unmatched gifts. The committee adopted a committee substitute related to SB 2066 to address an incorrect effective date, and moved that substitute forward so the appropriation identified in the session’s budget could be used to address the backlog; the committee reported the substitute favorably (reported vote: 9–0).

Votes at a glance - SB 2206 (R&D tax credit restructure/extension): reported favorably to full Senate, 10 ayes, 0 nays. Motion to report by Senator Bettencourt/Huffman presiding. (Discussion and multiple resource witnesses; committee substitute was withdrawn and the base bill advanced.) - SB 1030 (aviation MRO parts sales tax exemption): reported favorably, 10–0. - SB 2018 (Strong Families Tax Credit pilot): reported favorably, 10–0. - SB 1901 (Opioid Abatement Fund Council governance changes): reported favorably, recorded as 9–0 in committee. - SB 2066 (TRIP repeal / address backlog via contingency funding): committee substitute adopted and reported favorably, recorded as 9–0. - SB 935 (county motor fuel tax exemption): public testimony taken; bill left pending. - SB 2020 (rehab tax repeal on nonresidential remodels): public testimony taken; bill left pending (LBB fiscal note reported as large; sponsor postponed further action). - SB 214 (HVAC sales tax holiday): brief layout; public testimony none; bill left pending.

Why it matters: the committee’s actions could reshape incentives that affect county budgets, higher‑education research capacity, commercial renovation decisions, general aviation infrastructure, and nonprofit funding streams. Several measures reported favorably will next go to the full Senate for floor consideration; other proposals require additional fiscal work or drafting fixes before the committee will move them forward.

What’s next: bills reported favorably will be scheduled for Senate consideration. Bills left pending will receive further work from sponsors and staff, including updated fiscal notes or committee substitutes where requested.

Sources: committee hearing record, witness testimony and Comptroller and Legislative Budget Board summaries presented to the Senate Committee on Finance on May 20, 2025.