Beginning with the 2026 Texas Franchise Tax Report, which is based on the 2025 tax year, taxpayers must generally use the federal tax law in effect for the corresponding federal tax year, unless a Texas statute explicitly references the Internal Revenue Code as of January 1, 2007, the Texas Comptroller of Public Accounts (Comptroller) concluded in a recent memo. This is a significant development because it aligns the Texas cost of goods sold (COGS) depreciation rules with the current federal bonus depreciation rules, including 100% bonus depreciation under the One Big Beautiful Bill Act of 2025 for assets placed in service on or after January 19, 2025.

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