According to the Legislative Budget Board (LBB), the fiscal implications of SB 1058 are relatively modest but targeted. The bill would result in an estimated loss of $560,000 to the Property Tax Relief Fund during the 2026–27 biennium, with increasing annual losses projected thereafter—$580,000 in 2028, $600,000 in 2029, and $620,000 in 2030. This loss occurs because registered securities market operators would be allowed to exclude transaction rebate payments from their total revenue when calculating the franchise tax. These rebates are commonly used to encourage liquidity in trading markets.

Importantly, while the bill has no direct fiscal impact on general revenue during the current biennium, state law requires any shortfall in the Property Tax Relief Fund to be offset with transfers from general revenue to maintain full funding for the Foundation School Program. Thus, while general revenue is technically unaffected in the current forecast, the impact on education funding sources must still be managed by the legislature.

The bill’s financial assumptions are based on the anticipated launch of two securities exchanges in Texas: a newly established Texas Stock Exchange and a reincorporated version of the Chicago NYSE, which intends to move its operations to Texas. The revenue loss estimates assume these entities would generate transaction rebate activity equal to approximately 5% of that seen by NASDAQ. This suggests that while the immediate fiscal effect is limited, the long-term impact could grow if Texas continues to attract major securities market operators.

There are no projected fiscal implications for local governments, making the bill’s impact confined to state-level budget considerations. The legislation aims to make Texas more competitive for financial exchange operations, trading short-term revenue for long-term economic development.

SB 1058 proposes a fiscally conservative and pro-business refinement to the Texas Tax Code that is aligned with core liberty principles and strategic economic development goals. By allowing registered securities market operators to exclude transaction rebate payments from their total revenue for franchise tax purposes, the bill ensures these entities are taxed on their actual net earnings rather than gross transaction volume. This is a meaningful distinction, especially in financial markets where high-frequency trades and rebate models are foundational.

The Committee Substitute reflects a clear effort to modernize Texas's tax code to support the emergence of the state as a national financial hub. The legislative intent, as outlined in the bill analysis, is to eliminate ambiguity in how the franchise tax applies to trading platforms, which has previously discouraged large exchanges from locating in Texas. With plans already underway for a Texas Stock Exchange and potential reincorporation of the Chicago NYSE in Texas, this legislation is timely and could have long-term economic benefits despite a modest projected short-term revenue loss.

From a liberty-oriented perspective, the bill supports free enterprise and limited government by removing a tax barrier to entry for new financial infrastructure and aligning taxation with actual profit rather than pass-through incentives. It does not expand government authority or regulation and has no adverse implications for individual liberty, personal responsibility, or private property rights. Its fiscal implications are manageable, with an estimated $560,000 impact to the Property Tax Relief Fund in the next biennium—offsettable through the General Revenue Fund as part of ongoing education funding commitments.

Overall, SB 1058 positions Texas to compete with other states for capital market innovation while upholding fiscally responsible principles. The bill reflects a clear policy intention to foster economic growth through strategic tax clarity, and as such, Texas Policy Research recommends that lawmakers vote YES on SB 1058.

• Individual Liberty: The bill does not directly affect the personal freedoms of individuals. It is targeted at corporate taxation for a specific subset of financial market participants—registered securities market operators. As such, it neither enhances nor restricts individual rights, privacy, or freedoms.
• Personal Responsibility: The bill does not alter the responsibilities or expectations placed on individuals or private actors in a way that implicates this principle. While it adjusts the tax burden for financial entities, it does not encourage or discourage behavior in a way that would meaningfully affect personal accountability.
• Free Enterprise: This bill significantly advances the principle of free enterprise. By allowing certain securities market operators to exclude transaction rebate payments from their total revenue, it removes a structural tax distortion that could otherwise discourage investment in Texas-based financial exchanges. It aligns state tax policy with the realities of modern trading practices—particularly the "maker-taker" model—and ensures that only net income is taxed. This improves Texas's competitiveness, encourages financial innovation, and reduces barriers for entry into the market, all of which support a more dynamic and open economic environment.
• Private Property Rights: While the bill indirectly affects how business assets and profits are taxed, it does not involve the use or restriction of private property in the traditional legal sense. It neither limits nor expands governmental claims on private property beyond adjusting taxable income definitions.
• Limited Government: The bill promotes limited government by narrowing the state’s reach in how it defines and collects the franchise tax from complex financial transactions. Rather than creating a new tax or regulation, it reduces an existing one for a specific activity that could otherwise be misclassified as taxable revenue. The bill avoids expanding regulatory authority and reflects a restrained, targeted change that supports limited, clear, and predictable governance.

• HB 3684 (Same As)