Texas Comptroller Amends Rules Regarding Cost of Goods Sold

The Texas Comptroller of Public Accounts Adopted amendments to regulations on franchise tax margin calculations for cost of goods sold. The amendments allow expenses paid with qualifying broadband deployment grant proceeds and COVID-19 relief proceeds to be included in cost of goods sold calculations. Beginning with the 2026 franchise tax report, the amendments shift from using the 2007 Internal Revenue Code to current-year federal tax law when determining allowable depreciation amounts, allowing taxable entities to include bonus depreciation in cost of goods sold calculations and permitting a one-time net depreciation adjustment for qualifying assets on the 2026 report only. The ...