Relating to a franchise tax credit for, and the application of sales and use taxes to, certain research and development expenses.

This bill creates a state tax credit for businesses conducting research and development (R&D) in Texas. It allows companies to reduce their franchise tax liability by claiming a credit equal to a percentage of qualified R&D expenses reported on federal Form 6765 that are attributable to Texas activities. The credit applies only to expenses paid by the business or its affiliated group within Texas, using federal reporting rules as a basis. This would directly benefit Texas-based businesses and research institutions performing R&D within the state by lowering their state tax burden.