Texas Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.

We were recently asked about credits and incentives in Texas. I was able to speak with some Texas economic development professionals and learned some of their details (Texas Wide Open For Business site click here).

The main difference between Texas and most other states is that they have no corporate income tax or individual income tax!

Texas’ main incentives focus on rewarding “companies who are creating jobs and driving innovation in Texas.”  The Texas Enterprise Fund (TEF) is the largest “deal-closing” fund of its kind in the nation.  The Texas Emerging Technology Fund (TETF) provides grants to recruit the research talent and to help companies in R&D activities.  State and local communities offer a variety of sales and property tax incentives and financing solutions for businesses expanding or relocating. Programs include Enterprise Zone sales tax refunds, manufacturing sales tax exemptionsproperty tax value limitations, and freeport exemptions.

Pre-approval is required for all of Texas’ primary incentives.  Texas’ credits and incentives are not as complicated as many states and are generally straightforward.

Other incentives and grants include generous workforce training programsprovided through the Texas Workforce Commission.

Compared to Georgia, Texas has:

  • Different corporate taxes:  No corporate income tax.  No personal state income taxes.  Similar sales taxes and somewhat higher property taxes.
  • A broader range of industries eligible for incentives if adding jobs, a far narrower range for training incentives, and a much broader range of companies not needing incentives because they aren’t paying taxes in the first place!
  • Almost no opportunities for incentives unless pre-approved by state and/or local officials.

To summarize, Texas is very competitive for new and expanding businesses.  Representatives at the state and local level are eager to help – Texas economic developers are very aggressive and want your growing clients to move to Texas!

Do any of your clients have Texas connections?  Make sure you review their potential qualifying activities early to maximize their $$ benefits!!

DaleSig