Incentives & Financing

  • The Community's Return On Your Investment

    Texas takes the initiative to invest in the future by offering competitive incentives to companies who create jobs and drive innovation as they do business in our state and its communities. This section summarizes some of the most commonly utilized state offerings. Texas cities, counties and communities often offer local incentives and tax abatements. For local incentives, please contact the local economic development representative. Ask any TxEDC representative to help you find a contact in the community that interests you.

  • Texas Enterprise Fund

    The Deal Closer

    The Texas Enterprise Fund Offers a Special Incentive to Choose Texas

    If you're seriously considering Texas and opportunities in some other state, the Texas Enterprise Fund (TEF) might help you make your decision. The fund is a cash grant used as a financial 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. Since its inception in 2004, the TEF has awarded 114 grants totaling more than $519 million across a wide variety of industries and projects. TEF Award Listing – All Projects to Date

    Benefit

    Award dollar amounts are determined using an analytical model applied uniformly to each TEF applicant. This model assures that the State of Texas will see a full return on its investment within the period of a project contract due to the resulting increase in estimated sales tax revenues. Variations in award amounts are influenced by the number of jobs to be created, the expected timeframe for hiring, and the average wages to be paid. In the past, awards have ranged from $194,000 to $50 million.

    Eligibility

    The TEF is a significant investment by Texas in the state's economy. TEF grant recipients are contractually obligated to fulfill the terms of their job creation agreements with the State of Texas. Once a company has accepted an offer from the Texas Enterprise Fund, a signed contract is required prior to the distribution of an award. The contract obligates the grantee, among other terms and conditions, to job creation targets and commits the grantee to maintain these employment positions at or above the county average wage for the term of the agreement. Additionally, all TEF contracts contain provisions for grant repayment through clawbacks in the event that a grantee does not meet the obligations of the agreement. To be eligible, a project must meet the following criteria:

    • Competition with another state for the project must exist and the business must not have already made a location decision.

    • Projected new job creation must be significant – past recipients have typically created more than 75 jobs in urban areas or more than 25 in rural areas.

    • The new positions must be high-paying jobs – above the average wage of the county where the project would be located.

    • Capital investment by the company must be significant.

    • A significant rate of return on the public dollars being invested in the project must be demonstrated.

    • The project must have community involvement from the city, county, and/or school district, primarily in the form of local economic incentive offers.

    • The applicant must be a well-established, financially sound business.

    • The applicant's business sector must be an advanced industry that could potentially locate in another state or country.

    • The Governor, Lieutenant Governor, and the Speaker of the House must unanimously agree to support the use of TEF for each specific project.

    How to Apply

    Each applicant undergoes a thorough 11-step due diligence process. Corporate activity, financial standing, tax status, legal issues, credit ratings, and estimated economic impacts, as well as the business climates of competition locations are assessed for each project and taken into consideration for all award decisions. Download application »

    Administration/Contact

    The Economic Development & Tourism division of the Office of the Governor administers the Texas Enterprise Fund.

    Contact: Matt Dilly at (512) 936-0176 or Justin Reynolds at (512) 936-0278

    Find out more:

    Texas Enterprise Fund 2013 Legislative Report

    Texas Enterprise Fund Overview

    TEF AWARD LOCATION MAPS

  • Texas Emerging Technology Fund

    In Texas, we understand that high-tech companies don't just happen overnight but are a product of forethought, sound vision and planning, and strategic investments by both the public and private sectors. Through our Emerging Technology Fund, we are bringing the best scientists and researchers to Texas, attracting high-tech jobs and helping start-up companies get off the ground faster.”   -- Gov. Rick Perry

     

    What is the Texas Emerging Technology Fund (TETF)?

    The TETF is a $485 million fund created by the Texas Legislature in 2005 at the governor's request and reauthorized in 2007, 2009, 2011 and 2013. To date, the TETF has allocated nearly $220 million in grant matching and research superiority funds to Texas universities and more than $205 million to over 145 early stage companies. Additionally, since the inception of the TETF, more than $2.2 billion in additional investment from other non-state sources has followed on to the TETF investment, more than quadrupling the amount invested by the TETF.

    Mission:

    • Make Texas the best place in the nation to pursue the next great idea.
    • Give Texas an unparalleled advantage in the research, development and commercialization of emerging technologies.
    • Bring the best scientists, researchers and innovators to Texas.
    • Help startup companies get off the ground faster and attract high-tech jobs.

    TETF Funding Opportunities:

    1. Commercialization Awards: investments in university spin-off or university-related startup companies.
    2. Research Award Matching: funds create consortia which leverage the unique strengths of universities, federal government grant programs, and industry.
    3. Acquisition of Research Superiority: grants to enable public institutions of higher education in Texas to recruit the best research talent in the world.
    4. Regional Centers for Innovation and Commercialization: grants to universities and not-for-profit organizations to support the Texas entrepreneurial ecosystem and to recommend company investments to the TETF Advisory Committee.

    All applicants make presentations to a 17-member advisory committee of high-tech leaders, entrepreneurs and research experts who recommend funding allocations to the governor, lieutenant governor and speaker of the house. Meet the TETF Advisory Committee.

    After trustee approval, the formal contracting process begins and the applicant becomes part of the TETF portfolio, managed by Office of the Governor staff. Contact TETF staff.

    Enabling Legislation: Government Code 490

    Annual Reports:

    FY2014 Interim Report
    FY2013 Annual Report to the Texas State Legislature on the Texas Emerging Technology Fund.
    FY2012 Annual Report to the Texas State Legislature on the Texas Emerging Technology Fund.
    FY2011 Annual Report to the Texas State Legislature on the Texas Emerging Technology Fund.

  • Financing

    Finding the Money to Fund a Promising Project

    The Governor's Economic Development Office Can Help You Explore Your Opportunities

    It costs money to relocate or expand, and Texas is committed to providing and facilitating funding for companies and communities with expansion and relocation projects in the Lone Star State. Asset-based loans for companies, leveraged loans to communities and tax-exempt bond financing are just a few means of obtaining the capital necessary for a successful project. Financing programs include:

     

    Developing New Products

    The Texas Product/Business Fund is a revolving loan fund financed through original bond issuances. The primary objective of the program is to aid in the development, production and commercialization of new or improved products and to foster and stimulate small business in the state. The fund provides asset-based lending with flexible loan terms, competitive Loan-to-Value (LTV) and interest rates. Loan proceeds can be used for a broad range of capital and operating expenditures. Your company can secure loans with property, plant and equipment which can be amortized over the life of the asset. Communities or individual investors can assist as Guarantors. To be eligible, applicants must have at least 3 years of operating history and have unencumbered assets available for collateral. Preference for funding is given to the state's defined industry clusters including, but not limited to: nanotechnology, biotechnology, biomedicine, renewable energy, agriculture and aerospace. Texas is interested in creating and retaining high-quality jobs. For more information, contact the Economic Development Bank. The Office of the Governor, Texas Economic Development Bank administers the Texas Product/Business Fund at the direction of the Governor's appointed nine member board.

     

    Leveraging Community-Based Economic Development

    The Texas Leverage Fund (TLF) provides a source of financing to communities that have adopted an economic development sales tax. Communities may leverage future sales tax revenues to expand economic development through business expansions, business recruitment and exporting. Awarding loans from $25,000 to $6 million, the TLF is available for interim, long-term or gap financing. TLF loans provide flexible financing terms to match the unique needs of communities. The funds are low-cost loans, providing capital to communities at floating Prime Rate, as published in the Wall Street Journal. Generally, economic development corporations are eligible to borrow up to $6 million. Future sales tax revenues serve as collateral for loan repayment with required debt service coverage ratios specified in the Texas Leverage Fund Program Guidelines. Pledged tax collections not needed for actual debt service are available for other projects. Loan proceeds must be used to pay eligible "costs" of "projects" as defined by the amended Development Corporation Act of 1979. Under the Act, examples of eligible projects include land, buildings, machinery and equipment for manufacturing and industrial operations as well as sports, athletic, entertainment and public park purposes and events. To apply, submit this form to the Office of the Governor, Economic Development Bank.

     

    Bonds to Build Factories

    The State of Texas Industrial Revenue Bond Program (IRB) provides tax-exempt or taxable financing for eligible industrial or manufacturing projects as defined in the Development Corporation Act of 1979. The Act allows cities, counties, and conservation and reclamation districts to form non-profit industrial development corporations (IDCs) or authorities on their behalf to provide bond financing for projects within their jurisdictions. The IDC issues bonds to finance the capital costs for an industrial or manufacturing business. Generally, the bond debt service is paid by the business under the terms of a lease, sale or loan agreement. As such, it does not constitute a debt or obligation of the sponsoring governmental unit, the IDC or the State of Texas. Small issue bonds are limited to manufacturing facilities. The bond amount cannot exceed $10 million and the total capital expenditure limitation for the project is $20 million. Exempt facility bonds can be issued to finance facilities for the furnishing of water, sewage and solid waste disposal facilities, electric energy or gas production facilities, local district heating or cooling facilities and qualified hazardous waste facilities. Other exempt facility bonds can be issued to finance airports, dock and wharf facilities, mass commuting facilities and high-speed inter-rail facilities. These facilities must be government owned, but they can be leased or operated by management contractors. Businesses interested in applying for an industrial revenue bond should contact the local industrial development corporation as well as legal counsel specializing in the issuance of municipal bonds who will submit application materials on the business' behalf. The Industrial Revenue Bond Program is administered through the Office of the Governor, Economic Development Bank.

     

    Supporting the Communities That Support Our Military

    The Texas Military Value Revolving Loan Fund (TMVRLF) assists defense communities in enhancing the military value of a military facility in their area. The TMVRLF can help defense communities develop job-creating projects that minimize the negative effects of a defense base realignment or closure decision that occurred in 2005 or later. The fund can loan funds to help defense communities construct infrastructure to accommodate new or expanded military missions resulting from a base realignment and closure decision that occurred in 2005 or later. The Revolving Loan Fund provides a low-cost source of financing to eligible defense communities who meet the application criteria. The minimum amount of a loan is $1 million, while the maximum amount of a loan is determined by the availability of funds. The amount of financing that can be provided is also dependent upon the creditworthiness of the applicant. The State may loan up to 100 percent of the cost of the described project. The Texas Military Value Revolving Loan Fund program is administered by the Texas Military Preparedness Commission. To apply or request additional information, contact the Texas Military Preparedness Commission.

     

    Growth Capital for Texas Small Business

    A Certified Capital Company (CAPCO) is a private government-sponsored venture capital company formed to increase the availability of growth capital for small businesses located in Texas. The program is also intended to stimulate job creation in Texas by requiring supported businesses to have at least 80 percent of payroll/manpower located within Texas. It's one way small businesses in Texas receive venture capital. To be eligible, the business must be headquartered in Texas (or relocate to Texas within 90 days of the CAPCO's first investment); the business can have no more than 100 employees at the time of investment; 80 percent of payroll/workforce must be located within Texas; the primary business activity may be manufacturing, processing or product assembly, research and development or tangible services. The business may not be primarily engaged in retail sales, real estate development, insurance, banking, leasing, lending or professional services. By statute, a percentage of the CAPCO investments must be used for early stage businesses and businesses located in strategic investment areas. Get more information about CAPCO and the application process.

  • Grants

    Building an Infrastructure Conducive to Business

    Texas provides several types of grants to communities and businesses to fund a wide variety of projects, from public infrastructure projects in non-entitlement communities to cancer research and laboratory facility construction:

     

    Helping Communities Support Business

    The Texas Capital Fund Infrastructure Program (TCFIP) provides financial resources to non-entitlement communities for public infrastructure projects needed to assist businesses. Communities can use TCFIP grants in the amount of $50,000 to $1.5 million to build public infrastructure (water, sewer, roads, etc.) needed to assist a business which commits to create and/or retain permanent jobs, primarily for low and moderate-income persons. The program is only available to non-entitlement city or county governments.  Projects are evaluated by using a scoring system based on community need, jobs and economic impact. TCFIP is administered through the Texas Department of Agriculture. 

    Creating Jobs through Real Estate Development

    The Texas Capital Fund Real Estate Development Program is designed to provide financial resources to non-entitlement communities. Funds must be used for real estate development (acquisitions, construction and/or renovation) to assist a business which commits to create and/or retain permanent jobs, primarily for low and moderate-income persons. The minimum award is $50,000 and the maximum is $1,500,000. No interest is charged on the loan amount. The program is only available to non-entitlement city or county governments. Projects are evaluated by using a scoring system based on community need, jobs and economic impact. TCFIP is administered through the Texas Department of Agriculture.

    Texas Military Preparedness Commission

    Established in 2003 by the 78th Texas Legislature and placed in the Governor’s Office of Economic Development and Tourism in 2009, the Texas Military Preparedness Commission’s goal is to preserve, protect, expand, and attract new military missions, assets, and installations. Additionally, the TMPC encourages defense related businesses to expand or relocate in Texas. View the TMPC Installation Fact Sheet.

     

  • Tax Incentives

    Keeping Taxes Low and Investing Revenues Wisely

    Texas Tax Incentives Create Jobs

    Texas enhances its business-friendly environment with targeted tax incentive programs, including:

    Focused on a Region Ripe for Growth: The Texas Enterprise Zone Program

    The Texas Enterprise Zone Program is an economic development tool for local communities to partner with the State of Texas to promote job creation and significant private investment that will assist economically distressed areas of the state. Approved projects are eligible to apply for state sales and use tax refunds on qualified expenditures. The level and amount of refund is related to the capital investment and jobs created at the qualified business site. The Enterprise Zone Program is administered through the Office of the Governor, Economic Development Bank.

    Sample of Texas Enterprise Zone Program Sales Tax Refunds

    Level of
    Capital Investment ($)
    Maximum Number of
    Jobs Allocated
    Maximum
    Total Refund ($)
    Maximum Refund
    per Job Allocation ($)
    40,000 – 399,999 10 25,000 2,500
    400,000 – 999,999 25 62,000 2,500
    1,000,000 – 4,999,999 125 312,500 2,500
    5,000,000 – 149,999,999 500 1,250,000 2,500
    Double Jumbo Project
    150,000,000 – 249,999,999
    500 2,500,000 5,000
    Triple Jumbo Project
    250,000,000 or more
    500 3,750,000 7,500

    The target community will file the TEZP application. Community representatives will complete some of the application requirements and your company will provide information as needed. Download and review the following documents:

    The following materials may also provide information about the general program:

    Texas Enterprise Zones:

    Texas Assists Manufacturing

    Manufacturing Exemptions provide state sales and use tax exemptions to taxpayers who manufacture, fabricate or process tangible property for sale. The exemption generally applies to tangible personal property that becomes an ingredient or component of an item manufactured for sale, as well as taxable services performed on a manufactured product to make it more marketable. Natural gas/electricity exemptions require  a "predominant use study" that shows that at least 50 percent of the electricity or natural gas consumed by the business is used directly in the manufacturing process. Manufacturing exemptions are administered by the State Comptroller of Public Accounts. For information about applying for these exemptions and a full explanation of what is and is not exempt, visit the Comptroller's website.

    Limiting Taxes on Property

    The Texas Economic Development Act provides an eight-year limitation on the taxable value of the property extended to a taxpayer who agrees to build or install property and create jobs. The value limitation applies to the local school district maintenance and operations tax (M&O) portion of the property tax and a tax credit, and varies by school district. The property tax credit is awarded at the end of the eight-year value limitation term. The credit is for the M&O tax portion of the property tax paid to the school district for each complete tax year during the qualifying time period. The qualifying time period is the two years preceding the eight-year value limitation term, during which time the company pays taxes on the full value of the property. To participate, the company must apply to the effective school district. Value Limitation Tax Credits are administered through the Comptroller of Public Accounts. 

    Goods En Route

    A freeport exemption is a property tax exemption. Freeport property includes goods detained in Texas for 175 days or less before they are transported out of Texas. The exemption applies to goods, wares, ores and merchandise other than oil, gas and petroleum products (defined as liquid and gaseous materials immediately derived from refining petroleum or natural gas) and to aircraft or repair parts used by a certified air carrier.  Goods must be in Texas for assembling, storing, manufacturing, repair, maintenance, processing or fabricating purposes. The freeport exemption is administered through the Comptroller of Public Accounts. For application materials, click here.

    Equipment for a Cleaner Environment

    The pollution control incentive results from a Texas constitutional amendment approved in 1993. The incentive provides an exemption from property taxation for pollution control equipment. Compliance with environmental mandates through capital investments do not result in an increase in a facility's property taxes. To qualify, a facility must first receive a determination from the Texas Commission on Environmental Quality (TCEQ) that the property to receive the exemption is used wholly or partly for preventing, monitoring, controlling or reducing air, water or land pollution. The Pollution Control Equipment Incentive is administered through the Texas Commission on Environmental Quality. For application information and materials, click here. You can also contact the TCEQ at Tax Relief for Pollution-Control Property, MC 110; P.O. Box 13087; Austin, Texas 78711-3087, e-mail: txrelief@tceq.texas.gov or call (512) 239-4900.

    Renewable Energy

    Texas is a leading producer and consumer of alternative, renewable energy. Various tax exemptions, franchise tax exemptions and franchise tax deductions are available for renewable energy equipment and systems. Renewable energy encompasses solar, wind, ethanol and biodiesel energy. Several incentive programs apply:

    • A franchise tax exemption is available to manufacturers, sellers or installers of solar energy devices. The state also permits a corporate deduction from the state's franchise tax for renewable energy sources. Business owners may deduct the cost of the system from the company's taxable capital or deduct 10 percent from the company's income. Wind energy can qualify under the term "solar energy" for the exemption and deduction.
    • Texas property tax code permits a 100 percent exemption on the appraised value of solar, wind or biomass energy devices installed or constructed for the production and use of energy on-site. See Texas property tax Form 50-123, "Exemption Application for Solar or Wind-Powered Energy Devices" to claim this exemption.
    • Texas also offers a loan program to fund energy retrofits in public buildings. The "LoanSTAR" program is targeted to state agencies, school districts, higher education, local governments and hospitals for financed energy retrofits that pay for themselves in energy cost savings over time. 

    Detailed information on a variety of renewable energy exemptions and deductions is available on the State Energy Conservation Office website.

    Base Closure Buffer

    The Defense Economic Readjustment Zone Program (DERZ) was established to stimulate business recruitment and job creation in defense-dependent communities that are adversely impacted by base reduction or closure. DERZ can provide assistance to Texas communities, businesses and workers affected by, or vulnerable to, the closure or realignment of military installations and the reduction of federal defense contracting expenditures. Designated readjustment projects are eligible to apply for a state sales and use tax refund on qualified expenditures. Companies seeking DERZ relief must be nominated by the qualified community (Defense Economic Readjustment Project Application). There is a non-refundable fee of $500 for either a defense readjustment zone or defense readjustment project designation application, and applicants must provide specific information as required by statute. The Defense Economic Readjustment Zone Program is administered through the Office of the Governor, Economic Development Bank.

    Accommodating Data

    Texas is ideally positioned for data center operations. The state is centrally located and has access to talented, experienced high tech workers. A data center exemption applies to state sales and use tax on certain items necessary and essential to the operation of a qualified data center. The exemption is for state sales tax only. Local sales taxes are due on purchases of these qualifying items. Qualification requirements and full details are available from the Comptroller of Public Accounts.

    Research & Development

    Companies engaged in research and development activities can receive reductions in either applicable sales tax or franchise tax (not both). Certain qualifications apply. The R&D tax credit is administered through the Comptroller of Public Accounts. For more detailed information, click here.

     

  • Workforce Development

    Skills Development Fund

    Benefit

    • A business, consortium of businesses, or trade union identifies a training need, and then partners with a public community or technical college to fill its specific needs. Businesses work with college partners to submit proposals, develop curricula, and conduct training.
    • The Skills Development Fund pays for the training, the college administers the grant, and businesses create new jobs and improve the skills of their current workers.
    • Texas Workforce Commission provides access to a team of highly skilled professionals who provide technical assistance, at no charge, to help streamline the development of projects and proposals. The team is available to work directly with employers, colleges, Local Workforce Development Boards, and economic development partners throughout the life of the project to ensure employers are getting the training their workers need.

    Eligibility

    • Grant recipients are public community or technical colleges.
    • Business partners are primarily private for-profit businesses.

    Administration

    The Skills Development Fund is administered through the Texas Workforce Commission. For more detailed information on the program, click here.

    Self Sufficiency Fund

    Benefit

    Grant recipients (i.e. public community colleges, public technical colleges, and community-based organizations) partner with local businesses that participate in the planning and design of a proposed training project for in-need individuals.

    Administration

    The Self-Sufficiency Fund is administered by the Texas Workforce Commission. For more detailed information on the program, click here.

     

    Economic Development and Diversification Waiver