Biggins Lacy Shapiro & Company, LLC

Texas Economic Development Incentive Programs

GRANTS

Texas Enterprise Fund (TEF): The fund is used as a final incentive tool for projects that offer significant projected job creation and capital investment and where a single Texas site is competing with another viable out-of-state option. “Deal-closing” cash grants are calculated according to a uniform analytical model for each applicant. Award amounts are determined based on the average wage of new employees, taking into account the expected hiring timeline and number of jobs created, with per-employee award amounts subject to adjustment based on the company’s total proposed capital investment. Applications must also have support from the Texas community it is considering in the form of an incentive offer.

The Skills Development Fund: Discretionary grants may be provided to public community and technical colleges that develop customized job training programs for businesses that want to train new workers or upgrade the skills of existing employees. Administered by the Texas Workforce Commission, the average training costs reimbursed are $1,800 per trainee and up to $500,000 for a business; however the actual benefit will depend on the project. 

Texas Capital Fund: Supports rural business development, retention and expansion by providing funds for public infrastructure, real estate development, or the elimination of deteriorated conditions. Award amounts are vary by the type of project and range from $50,000 - $1,000,000.

SPECIAL ZONING

Enterprise Zones:  Businesses that establish operations in an Enterprise Zone are eligible to receive refunds on state sales and use tax for qualified expenditures. Enterprise Zones are located in economically distressed areas. The maximum refund amount available is based on the company’s capital investment and job creation. Local communities may also provide incentives such as tax abatements, fee waivers and reduced regulations to businesses within an enterprise zone.

TAX EXEMPTIONS

Sales and Use Tax Exemptions: Available to taxpayers who manufacture, fabricate, or process tangible property for sale; manufacturing companies are also exempt from paying state sales/use tax on electricity and natural gas used in manufacturing, processing, or fabricating tangible personal property.

Freeport Exemption: Property tax exemptions are available for various types of goods that are detained in Texas for 175 days or less, which can be waived for certain goods.  The goods must be in Texas only for a limited purpose such as assembly, storage, manufacturing, processing or fabricating. This exemption is available in select areas only.

Data Center Tax Exemption:  Data Center projects involving at least 100,000 square feet that result in the creation of at least 20 qualifying jobs and a capital investment of at least $200 million over a 5-year period can qualify for a 100% exemption on sales and use tax.  

Sales Tax Exemption or Franchise Tax Credit for Qualified Research:  A person engaged in qualified research can claim either a sales and use tax exemption on the purchase, lease, rental, storage or use of depreciable tangible personal property directly used in qualified research, or a franchise tax credit based on qualified research expenses. The amount of the credit is 5% of the difference between the qualified research expense incurred in Texas and the base period.  The total credit cannot exceed 50% of franchise tax liability.

LOW INTEREST FINANCING

Texas Leverage Fund (TLF):  The program provides financing for qualified projects in Texas municipalities by allowing communities to leverage future sales tax revenues to support economic development projects that promote business expansion, recruitment, and exporting. The program is geared toward small, rural communities which may be unable to access traditional sources of infrastructure financing like municipal bonds. Loans range from $25,000 to $5 million and may be available for interim, long-term or gap financing.

Product Development & Small Business Incubator Fund (PDSBI): Recipients are small businesses with a new or improved product being developed, produced and and/or commercialized in Texas or a small business incubator. A preference is given in the areas of semiconductors, nanotechnology, biotechnology and biomedicine.

VALUE LIMITATION

Texas Economic Development Act (Chapter 313): Recipients are manufacturing, R&D, or renewable energy businesses subject to franchise taxation expanding or relocating in a community, will make a large-scale capital investment by building or installing property in a school district, and receives a 10-year limit on its taxable value for school maintenance create jobs meeting certain wage and other requirements. In exchange for creating jobs and building a facility the business and operations tax (M&O). For the term of the limitation agreement, school M&O taxes are not levied on the property value in excess of the limitation amount. Limitation amounts are established by statute and vary by school district from $10 million to $100 million.

IN-STATE TUITION

Economic Development & Diversification in-State Tuition of Employees: Allows employees—and those employees’ family members—of a qualified business considering a relocation or expansion of its operations in the State of Texas to pay in-state tuition rates at public institutions of higher education in the state without first establishing residency.

Last updated: May 2019



 
Biggins Lacy Shapiro & Company, LLC
609-924-9775
info@blsstrategies.com