Please contact the economic development professionals at BAHEP, 832.536.3255, to learn more about the many business incentives that are available, including:
State of Texas Economic Incentives
Texas Enterprise Fund
The Governor, with approval of the Lt. Governor and Speaker of the House, can award grants for economic development, infrastructure development, community development, job training programs and to provide business incentives to companies relocating or expanding in the state. Application fee is $1,000 and program includes claw-back provisions if the company does not meet their contractual obligations.
- Projects that are considered for Enterprise Fund support must demonstrate a project’s worthiness, maximize the benefit to the State of Texas and realize a significant rate of return of the public dollars. Minimum of 100 new jobs.
- Award amounts have been in the range of $1,000 up to $10,000 per job created.
Texas Skills Development Fund
The Skills Development Fund is an innovative program created to assist Texas public community and technical colleges finance customized job training for their local businesses. Grants are provided to help companies and labor unions form partnerships with local community colleges and technical schools to provide custom job training. Average training costs is $1,800 per trainee; however, the benefit may vary depending on the proposal.
Texas Enterprise Zone Program
Under the statewide cap of 105 projects per biennium a community with less than 250,000 in population may have up to six enterprise projects. A community with 250,000 in population or greater may have up to nine enterprise projects. Upon a community designating a business as an enterprise project, and upon that project’s designation being approved by the state, the business would be eligible for the following incentives:
State Sales and Use Tax Refunds- An enterprise project is eligible for a refund for all state sales and use taxes paid and used at the qualified business site. The total amount of any refund will continue to be predicated on investment amount and number of jobs created/retained. The refund for each designation can be an amount ranging from a minimum of $2,500 per job to a maximum of $7,500 per job as follows:
1. Half Enterprise Project:
2. Enterprise Project: If project investment amount is equal to or greater than $5 million or more, then refund amount is $2,500 per job up to a maximum of 500 jobs created/retained;
3. Double Jumbo Enterprise Project: If project investment amount is equal to or greater than $150 million and less $250 million, then refund amount is $5,000 per job up to a maximum of 500 jobs created;
4. Triple Jumbo Enterprise Project: If project investment amount is equal to or greater than $250 million then refund amount is $7,500 per job up to a minimum of 500 jobs created. Maximum refund available is $3.75 million;
Receipts for purchases of building materials and machinery and equipment and payroll information are required to be retained as part of the audit process. (Note: All contracts should separate the costs for building materials and/or equipment from the costs of labor and services in order to be eligible.)
State Sales & Use Tax Exemptions
Manufacturing Machinery & Equipment
Leased or purchased machinery, equipment, replacement parts, and accessories that are used or consumed in the manufacturing, processing, fabricating, or repairing of tangible personal property for ultimate sale, are exempt from state and local sales and use tax. Texas businesses are exempt from paying state sales and use tax on labor for constructing new facilities. Texas businesses are exempt from paying state sales and use tax on the purchase of machinery exclusively used in processing, packing, or marketing agricultural products by the original producer at a location operated by the original producer.
Natural Gas & Electricity
Texas companies are exempt from paying state and local sales and use tax on electricity and natural gas used in manufacturing, processing, or fabricating tangible personal property. The company must complete a "predominant use study” that shows that at least 50 percent of the electricity or natural gas consumed by the business directly causes a physical change to a product
Property Tax Abatement
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 cannot exceed 10 years in length. Terms of the abatement agreement, including the minimum required investments and job creation, vary among the taxing jurisdictions.
· Increase tax roll value of new real property by at least $1,000,000
· Create at least 25 new full-time permanent positions at the project site
· Be competitively sited. In other words, senior management is actively evaluating jurisdictions, in addition to Harris County, and, but for tax abatement, the project would not be constructed in Harris County.
· Dollar value eligible for abatements is $1,000,000 per new job created
· Amount of abatement will be a constant 50 percent, per year, up to 10 years. This enables a greater number of applicants to qualify, especially small to midsize companies who have limited access to primary capital markets and who must finance facilities through lease-buyback transactions with renewal intervals of less than 10 years.
Chapter 313 School Property Tax Limitation
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
Texas Local Government Code permits 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.
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. 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.
Foreign Trade Zone (FTZ)
FTZs are available in the Houston region, and 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. 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.
Goods in Transit Exemption
Some taxing entities in Texas have adopted the Goods-in-Transit Exemption for inventory that is temporarily stored at a third-party location that has no direct or indirect ownership interest in the inventory. To be eligible, the inventory must be transported to another location, inside or outside the state, within 175 days after the items were acquired or imported into the state.
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. 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.
Harris County LEED Program
(% Value Abated) x (Required Investment) = $100,000
Certification Abated Investment
|Certified/Basic ||1.0% ||$10,000,000 |
|Silver ||2.5% ||$ 4,000,000 |
|Gold ||5.0% ||$ 2,000,000 |
|Platinum ||10.0% ||$ 1,000,000 |
For a facility to qualify, no job creation target or competitive siting is required however applicant must register with the USGBC for LEED® certification prior to submitting the Green Building Tax Abatement Application to Harris County. The application must be submitted to Harris County prior to commencing construction of the proposed new commercial development. Application fee of $1,000 accompanies application. The tax abatement benefit commences when the facility is complete and LEED® certification is granted to the structure by the USGBC. The value of the tax abatement is calculated based on the appraised value after LEED® Certification is obtained.