Texas yacht tax cut expected to offer many benefits to state

By Mary Alys Cherry

After trying for six years, the state’s boat dealers finally caught a break with the 86th Texas Legislature – a big tax break they expect will not only revive the state’s boating industry but also save jobs in the small businesses that serve the maritime industry, such as hotels and restaurants, that have been lost to Florida and coastal Atlantic states over the past decade.

Beginning in September, the sales tax on luxury yachts as long as 115 feet will be $18,750, which means a tax break of $228,000 on a $3 million yacht.

But the real purpose of the legislation is to revive Texas’ marine industry, local supporters such as State Sen. Larry Taylor, R-Friendswood will be quick to tell you. A few millionaires will benefit, but that is not the point. People who buy big yachts are buying them in other states, Taylor explained.

Since 2010 when Florida capped its sales tax on yachts at $18,000, Texas’ market share has slowly dwindled as those buying yachts go to Florida to save money, and most of the yachts stay docked in the Sunshine State. That means Florida benefits from gas and diesel sales and other services instead of Texas. It also means jobs to provide services to the yacht owners.

Taylor expects the legislation will create up to 600 jobs in Texas. He said once boats are bought in Texas, the buyers will also buy fuel here, as well as other equipment and repairs — all services that are going to other states right now.

When the tax cut proposal was introduced in 2015, legislators couldn’t get past the benefit to millionaires and promptly let the bill die. A second try in the 2017 Legislature also died. But this year with help from a number of local people, it passed both houses.

“Sometimes economic development initiatives that have real, tangible value for a region take years to implement,” Bay Area Houston Economic Partnership President Bob Mitchell said. “This was the case with capping the Texas sales tax on luxury yachts. I believe that the passing of this bill will produce significant, positive results for the state’s maritime industry, including the many small businesses that support that industry and the jobs they create.

“We’re grateful to Senator Taylor for sponsoring HB 4032 and to Reps. Greg Bonnen, M.D., Dennis Paul, Ed Thompson, Ryan Guillen and Geanie W. Morrison, for serving as its authors,” Mitchell added.

Others who worked so hard to get the Maritime Jobs Preservation Legislation passed included:

  • John Preston of the Boaters Directory, who took the lead on this legislative agenda, formed the Texas Marine Industry Coalition in 2018, and led the advocacy for legislation during the 86th Texas Legislature
  • Jay Dee Jackson of Galati Yacht Sales
  • Greg and Glenda Allison of Gulf Coast Yacht Brokers Association
  • Simon Urbanic, realtor and BAHEP member
  • Harriet Pilgrim. BAHEP membership director; and Bob
  • Greg and Glenda Allison and Simon Urbanic also spent many hours advocating for the tax cut during the two previous legislative sessions  — work that laid the groundwork for this year’s legislation.
  • Marcy Fryday, Lakewood Yacht Club.

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