Under current franchise tax law, 100% of the payments that a landlord receives from a tenant, including so-called “pass-through expenses” or “triple-net expenses,” which are tenants’ reimbursements of the landlord’s operating expenses, are included in the landlord’s Total Revenue for calculating Texas franchise tax owed. Tenant pass-through expenses typically include real property taxes, insurance costs, and operating expenses such as utilities costs and management fees. A bill introduced in the Texas Senate, SB 1221, would exclude reimbursements of operating expenses from the landlord’s Total Revenue. If enacted, this would be a significant franchise tax benefit for Texas landlords. The text of SB 1221 is posted on the Texas Legislature’s website: http://www.capitol.state.tx.us.