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Signed Into Law
Signed May 13, 2025Effective 2026-01-01
SB1058

Regular Session

Relating to the exclusion of certain securities transaction payments from the total revenue of a taxable entity that is a registered securities market operator.

Government Affairs & Regulatory Compliance Analysis

SB1058: Government Affairs Overview

SB1058 amends the Texas Tax Code to allow registered securities market operators (specifically NAICS 523210) to exclude "transaction rebate payments" made to brokers or dealers from their total revenue calculations. This legislation is designed to lower the Franchise Tax burden for exchanges, such as the incoming Texas Stock Exchange (TXSE), by treating liquidity incentives as pass-through costs rather than taxable revenue.

Sen. Tan Parker·Senate Bill·Regular Session

Moderate
Low Cost
Effective:2026-01-01
Business Impact

Who SB1058 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: moderate

Notable regulatory updates (effective 2026-01-01). Consider how these changes may affect your operations.

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Banking & Finance

Affected business types:

  • Banks
  • Credit unions
  • Financial services firms
  • Insurance companies
View all banking & finance legislation

Key Operational Considerations

  • 1Terminology: Amend contracts to explicitly label payments as "Transaction Rebate Payments" intended to "incentivize liquidity."
  • 2Risk: If contracts define these as "marketing fees" or generic "administrative fees," the Comptroller is likely to disallow the exclusion.
  • 3Finance/Accounting: Staff must be trained to distinguish between standard commission expenses and liquidity rebates.
  • 4Settlement Teams: Personnel managing settlement software must ensure automated tagging is configured correctly to separate these specific outflows.

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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SB1058
Moderate
Relating to the exclusion of certain securities transaction payments from the total revenue of a taxable entity that is a registered securities market...
Moderate Compliance Urgency
Requires near-term attention
Cost Impact
Low
Effective
2026-01-01
Enforcing Agencies
Texas Comptroller of Public Acco...
Primary Author: Sen. Tan Parker
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: January 1, 2026.
  • Compliance Deadline: Immediate. While the law applies to reports due in 2026, the Texas Franchise Tax is based on the prior year's business activity. You must segregate these payments in your accounting systems starting January 1, 2025, to claim the exclusion on the May 2026 report.
  • Agency Rulemaking: The Texas Comptroller has not yet issued specific guidance on the definition of "incentivize." Expect rulemaking or policy memos between Q4 2025 and Q1 2026 to clarify acceptable documentation for these rebates.

Immediate Action Plan

  • Direct the CFO to isolate "Transaction Rebate Payments" in the General Ledger immediately (retroactive to Jan 1, 2025).
  • Audit current MSAs with brokers/dealers to ensure payment descriptions align with the statutory definition of a rebate.
  • Verify NAICS registration on federal tax filings to ensure it matches code 523210.
  • Update Pro-Forma tax models for the May 15, 2026, Franchise Tax Report to reflect the reduced revenue base.

Operational Changes Required

Contracts

Master Service Agreements (MSAs) with Market Makers and Liquidity Providers must be reviewed.

  • Terminology: Amend contracts to explicitly label payments as "Transaction Rebate Payments" intended to "incentivize liquidity."
  • Risk: If contracts define these as "marketing fees" or generic "administrative fees," the Comptroller is likely to disallow the exclusion.

Hiring/Training

  • Finance/Accounting: Staff must be trained to distinguish between standard commission expenses and liquidity rebates.
  • Settlement Teams: Personnel managing settlement software must ensure automated tagging is configured correctly to separate these specific outflows.

Reporting & Record-Keeping

  • General Ledger: Create specific GL codes for "Transaction Rebate Payments." Do not commingle these with Cost of Goods Sold (COGS).
  • Counterparty Verification: Maintain active files proving payment recipients meet the federal definition of a "Broker" (15 U.S.C. Section 78c(a)(4)) or "Dealer" (15 U.S.C. Section 78c(a)(5)).
  • Transaction Linking: Ensure your system can reconcile rebates to specific securities transactions or transaction batches.

Fees & Costs

  • Tax Liability: This results in a decrease in Franchise Tax liability. Adjust tax reserve models for FY 2026.
  • Implementation Cost: Minimal one-time administrative costs to update accounting software and legal contract review.

Strategic Ambiguities & Considerations

  • "Incentivize" vs. "Compensate": The statute requires the rebate be used to "incentivize" liquidity. It is unclear if fixed monthly payments qualify. Guidance: Structure rebates as variable payments tied to volume; fixed fees are at high risk of audit scrutiny.
  • NAICS Classification: The law strictly limits this to NAICS 523210. If your entity operates under a different primary code (e.g., general financial investment), you may be ineligible even if you perform similar functions.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 3, 2025
Passed Senate
Apr 10, 2025
Passed House
Apr 29, 2025
Signed
May 13, 2025
Effective
Jan 1, 2026
TopicsFinancialFinancial--generalTaxationTaxation--franchiseMortgage Brokers & Bankers
03

Senate Authors

Sen. Tan ParkerRepublican · Primary Author
Coauthors (2)

House Sponsors

Rep. Giovanni CapriglioneRepublican · Primary Sponsor
Joint Sponsors

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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Quick Reference

Frequently Asked Questions

Common questions about SB1058

Q

What does Texas SB1058 do?

SB1058 amends the Texas Tax Code to allow registered securities market operators (specifically NAICS 523210) to exclude "transaction rebate payments" made to brokers or dealers from their total revenue calculations. This legislation is designed to lower the Franchise Tax burden for exchanges, such as the incoming Texas Stock Exchange (TXSE), by treating liquidity incentives as pass-through costs rather than taxable revenue.

Q

Who authored SB1058?

SB1058 was authored by Texas Senator Tan Parker during the Regular Session.

Q

When was SB1058 signed into law?

SB1058 was signed into law by Governor Greg Abbott on May 13, 2025.

Q

Which agencies enforce SB1058?

SB1058 is enforced by Texas Comptroller of Public Accounts.

Q

How significant are the changes in SB1058?

The regulatory priority for SB1058 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SB1058?

The cost impact of SB1058 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does SB1058 address?

SB1058 addresses topics including financial, financial--general, taxation, taxation--franchise and mortgage brokers & bankers.

Q

What are the key dates for SB1058?

Key dates for SB1058: Effective date is 2026-01-01. Consult with legal counsel regarding applicability.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 25, 2026