Texas House approves tax break for space companies like Musk's SpaceX, Bezos' Blue Origin

Yahoo

09-05-2025

Space companies in Texas, including Elon Musk's SpaceX, could save millions of dollars in taxes under a financial incentive bill the state House narrowly passed Thursday afternoon.
House Bill 3045 would exempt all corporations that operate a spaceport used by the U.S. Department of Defense from franchise taxes, which businesses typically pay to the state. At least three companies with Texas spaceports would qualify: SpaceX, Jeff Bezos' Blue Origins and Firefly Aerospace. The Pentagon awarded SpaceX and Blue Origin a combined $13.8 billion to launch defensive satellites for the U.S. Space Force in April, and Cedar Park-based Firefly won a contract to perform a responsive on-orbit mission.
State Rep. Stan Gerdes, whose district includes Bastrop County, filed the bill to keep those companies in Texas and attract others to the state, he told the American-Statesman.
The space industry 'is a big player,' Gerdes, R-Smithville, told the Statesman. 'This is a small tool with a little bit of an incentive to say, 'Hey, we want you to stay here and keep doing what you're doing instead of going to Florida or California.''
The space industry invests billions in Texas, including $1 billion in Gerdes' district, which includes a SpaceX manufacturing facility, Musk's Boring Company and facilities for X, the social media platform Musk owns.
"We want to be No. 1 in space race," Gerdes said.
The measure would cost Texas $2.9 million in expected revenue over the next two years and $4.6 million by 2030, according to the Texas Comptroller. The companies still pay property taxes.
After the bill passed by a 15-vote margin in a preliminary vote Wednesday, several representatives switched their vote, an unusual move. After a vote verification Thursday, it passed 70-69.
A number of hardline Republicans voted against the bill and several Democratic members approved it.
Austin state Rep. John Bucy III was among the bill's Democratic supporters. He said HB 3045 will directly benefit his district and Williamson County, where Firefly Aerospace is headquartered.
'Being a leader in space industry is vital, and we've got real competition. So I think these measures matter,' said Bucy, who is vice chair of the House Innovation & Technology Caucus. 'Other states are looking at whatever package they can to lure space industry away.'
His colleague in the Austin delegation, Democratic state Rep. James Talarico, however, had a different perspective.
'If Elon Musk wants to establish a business here, then he should pay taxes like the rest of us,' he said.
Talarico said the tax break isn't necessary to keep space companies in the Lone Star state.
'They're already here and I think there's a lot of reasons to start a business or bring a business to Texas,' he said. 'We can have economic development without special tax giveaways to the wealthiest people.'
Several other Democratic members opposed the bill on the grounds that it would benefit Musk and Bezos, both billionaires. But Bucy said that shouldn't be the deciding factor.
'I kept hearing Dems say this helps Elon. Well, not exclusively. It helps Firefly, which I believe in a lot,' Bucy said. 'Yes, it also helps Elon … but I don't know that the personality is the reason we should set policy.'
United Launch Alliance, a joint venture of Boeing and Lockheed Martin, could also look to take advantage of the measure. The company won $5.3 billion for 19 Space Force missions in April, according to Reuters.
Franchise taxes go directly into the property tax relief fund, which is used to offset what Texans pay to fund public schools. According to the fiscal note, an equal amount of tax revenue would need to be allocated in the budget to replace the expected losses.
Republican Sen. Adam Hinojosa, whose district includes the SpaceX launching site in Brownsville, filed the companion bill in the Senate. The measure was heard in the Senate Finance Committee in March but has not received a vote.
This article originally appeared on Austin American-Statesman: Bill passed by Texas House would slash taxes for Elon Musk's SpaceX