Taxes & Incentives

The Governor, with approval of the Lt. Governor and Speaker of the House, can award cash grants to companies relocating or expanding in the State of Texas. Projects considered for the Texas Enterprise Fund must demonstrate a project’s worthiness through a significant projected job creation and capital investment in order to maximize the benefit to the State of Texas and realize a return of the public dollars.

Projects must create a minimum of 25 new jobs in a rural community or 75 new jobs in an urban community with wages at or above the county average.
Award amounts have been in the range of $5,000 up to $10,000 per job created, with an average of$7,500 per qualifying new job in Texas.
Application fee is $1,000 with a 30-day approval process.
Award amount and cost benefit analysis is heavily based on the number of new jobs, the job ramp up, and the new job wages.

Program includes claw-back provisions if the company does not meet their obligations of the agreement.

For more information, please click here.

Grants are available to assist Texas community and technical colleges with financing for customized job training for Texas businesses and employees. This fund assists businesses and trade unions by financing the design and implementation of customized job training projects.

• Training grants have averaged approximately
  $1,800 per qualifying trainee.
• The average maximum award is $500,000 per company; however, the benefit may vary depending on the proposal.
• The partner college applies for the grant and administers the grant on the company’s behalf.
• The Texas Workforce Commission has an approval process for the current two fiscal years (Sept 1, 2015 – Aug 31, 2017).

For more information, please contact Dale Robertson with the Texas Workforce Commission at (512) 463-8844 or visit the attached link.

Public community or technical colleges have the opportunity to provide intensive and rapid response to, and support services for, employers undergoing expansion or relocation operations in Texas. The program develops customized workforce training programs and fast-track curriculum development training includes support services for employers. There is instructor certification and a focus on acquiring training equipment necessary for instructor certification and employment.

For more information, click here.

Businesses with fewer than 100 employees can apply to the Texas Workforce Commission (TWC) for training offered by their local community college or technical college, or the Texas Engineering Extension Service (TEEX). The program pays up to $1,800 for each new employee being trained and $900 for existing employees per 12-month period.

For more information, please click here.

Funds from this program can be utilized for public infrastructure or real estate development needed to assist a business, which commits to create and/or retain permanent jobs in Texas’ rural communities and counties. The minimum award is $100,000 and the maximum is $1,500,000. The award may not exceed 50 percent of the total project cost.

• Funds used for public infrastructure on public property are awarded to the community as a grant while public infrastructure improvements on private property would qualify as a zero- interest loan.
• Funds used for real estate development
  (acquisitions, construction, and/or improvements) will be awarded as a zero-interest loan. Funds are provided with no interest accruing and with payments based on a 20-year amortization schedule.

For more information, please contact Chris Reynolds with the Texas Department of Agriculture at (512) 936-8163 or visit the attached link.

The Economic Development and Diversification In-State Tuition Incentive may be offered to qualified businesses that are in the decision-making process to relocate or expand their operations into Texas.

The waiver allows employees and family members of the qualified business to pay Texas resident tuition rate at a Texas public institution of higher education before establishing residency.

For more information, please click here.

State sales and use tax exemptions are available on the purchase of machinery or equipment for businesses engaged in manufacturing, processing, or fabricating of tangible personal property for sale.
For more information, please visit the Texas State Comptroller website.

Companies that use more than 50 percent of their utilities in the manufacturing, processing, or fabricating of products for resale may apply for a sales tax exemption on their utilities. The sales tax exemption applies to all utilities purchased through a single point of delivery as long as the utilities are predominantly used to manufacture, process, or fabricate the product. Requires a predominant use study through the utility provider.

Ad Valorem Property Tax Abatements are available to companies with facilities, devices and equipment used to control air, water or land pollution. Companies wishing to apply for tax relief for their efforts in controlling pollution can apply to the Texas Commission on Environmental Quality.

Companies solely engaged in manufacturing, selling, or installing solar or wind devices are exempt from the Texas franchise tax. Other businesses that install solar or wind energy systems are eligible for a franchise tax deduction of 10% of the system’s cost.

Residential, commercial, and industrial renewable energy devices are exempt from property tax under Texas law. This exemption is applicable to most renewable technologies, including solar, wind, and biomass.

PACE is designed to provide low cost, long term financing for water and energy efficiency and conservation improvements to commercial and industrial properties. Under PACE, property owners would evaluate measures that achieve energy savings improvements or retrofits and receive financing, repaid as an assessment on the building. The assessment term would be up to 20 years.

A taxable entity may deduct relocation costs incurred from relocating a main office or other principal place of business to the State of Texas from another state or country if the taxable entity did not do business in the State of Texas before relocating.

Provides tax-exempt or taxable financing for eligible industrial or manufacturing projects. This allows cities, counties, conservation and reclamation districts to form non-profit industrial development corporations (IDCs) or authorities on their behalf. The purpose is to provide bonds for projects within their jurisdiction.

Designed to help Texas small manufacturing companies remain competitive in the ever-changing global marketplace. The TMAC Center provides technical assistance at a discounted rate for process improvements, environmental regulations upgrades, changes in the technology and the marketplace.

Local communities partner with Texas to promote job creation and capital investment in economically distressed areas. Approved projects are eligible to apply for state sales and use tax refunds on qualified expenditures.

• Employers who commit to creating or retaining permanent jobs, make capital investment, and fill at least 25% of its new jobs with individuals who are either economically disadvantaged, veterans, or residents of an enterprise zone can receive state sales & use tax refunds on items purchased for the designation site.
• Projects must meet or exceed country weekly wage average to be eligible.

The benefits are based on job creation or retention and capital investment.
For most projects, the maximum sales tax rebate is $2,500 per qualifying employee, up to 500 employees. Larger projects can qualify for higher rebates up to $7,500 per qualifying employee.

For additional information, please click here.

Beginning in January 2014, the Research & Development tax credit provides qualified companies with an option for tax savings. A company may select one of the below options:

• A sales tax exemption for purchases of equipment and software used in qualified research in Texas, OR
• A franchise tax credit for R&D expenditures.
  The Texas R&D credit also provides an incentive for taxpayers to contract with institutions of higher education to perform qualified research in Texas.
• The total credit cannot exceed 50 percent of the company’s franchise tax due for the period.

 

Passed in 2015, the Governor’s University Research Initiative matches grants to assist eligible higher
education institutions in recruiting distinguished researchers.

Researchers considered must meet all eligibility requirements necessary to qualify as a distinguished researcher.

The applicant must be at an eligible institution.
The grant application must have the support of the applicant institution’s president and the institution’s governing board, the chair of the institution governing board, or the chancellor of the University System.
The grant match commitment amount is $5,000,000 or less per distinguished researcher.

For additional information, please review http://gov.texas.gov/ecodev/guri/home.

 

Cities and counties within the Houston area offer ad valorem property tax abatements that exempt from taxation all or part of the increased value in real or personal property.

• Maximum tax abatement is 100% per year and cannot exceed 10 years in length. Terms of the abatement agreement, including the minimum required investments and job creation, vary among the taxing jurisdictions.
• Pollution Control Property Tax Abatements are available to companies with facilities, devices and equipment used to control air, water or land pollution. Companies wishing to apply for tax relief for their efforts in controlling pollution can apply for a positive use determination from the Texas Commission on Environmental Quality (TCEQ).

An appraised value limitation agreement in which a taxpayer agrees to build or install property and create jobs in exchange for a limitation on the taxable property value for school district maintenance and operations tax (M&O) purposes and a tax credit. The minimum limitation value varies by school district.

Chapter 380 / 381 Economic Development Agreements are allowed by the Texas Local Government Code permitting cities (Chapter 380) and counties (Chapter 381) to offer flexible incentives designed to promote economic development such as commercial and retail projects.

Key components may provide for offering loans and grants of city funds or services; commitments for infrastructure; or payments to a business of an amount equal to a portion of the local sales tax generated by the project. The terms of the agreements may be flexible to suit both the needs of the businesses and the local community and are determined on a case-by-case basis.

Authorized by the legislature in 1979, an important tool used by local communities to support real estate, infrastructure, and training. Both type A and B corporations are authorized to fund projects which create or retain primary jobs or business infrastructure. Allowable expenditures include:

• Land and facilities improvements
• Machinery and supplies
• Financial transaction and planning costs
• Cleanup costs (requires voter approval)
• Bonded debt expenses

FTZs are available in the Houston region, and they allow companies dealing in foreign trade to delay payment of U.S. Custom’s import duties until their goods and merchandise actually enter U.S. commerce.

• Sites are typically in or near a U.S. Customs port of entry where foreign and domestic merchandise is generally considered to be in international trade.
• Goods can be brought into a zone without formal Customs entry or without incurring Customs duties or excise taxes unless and until they are imported into the United States.

Taxing authorities in Texas are allowed to exempt ad valorem property taxes for all business inventories acquired in or brought into Texas for fabrication, assembling, manufacture, storage or processing and then exported outside the state within 175 days.

• Multiple jurisdictions in the Houston region offer this exemption on Freeport eligible goods.
• Freeport eligible items include – goods, wares, merchandise, other tangible personal property
  (including aircraft parts) and ores. Non-eligible items include oil, natural gas and other petroleum products.
• No approval required