Tax Abatement and Incentives
Tax abatements help reduce the substantial costs usually associated with locating or expanding a business in a local community. All applications are considered on a case-by-case basis. Parts of the region also offer business incentives and tax abatement to certain sectors. The new policy has no specific minimum investment or job creation requirements, making tax abatement available to small businesses. The combined city/county enterprise zone, along with the new tax abatement policy, is designed to stimulate local development and encourage entrepreneurship. The percentage of abatement and length of time are determined on a case-by-case basis and are tied to the use of local subcontractors or the direct-hire of local labor. Tax Abatement Policy
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Revolving Loan Fund
The revolving loan program makes low-interest, fixed-asset and working capital loans to small and minority-owned businesses. The Federal Development Administration approvedthe grant of $750,000 that capitalized the loan fund. For more information, please call (409) 880-3772 or visit www.ci.beaumont.com.
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SBAlliance Capital
SBAlliance Capital is a Certified Development Company that administers small business loans through the US Small Business Administration's SBA 504 lending program. SBA 504 loans are available to for-profit small to medium size businesses for the purchase, construction or renovation of fixed assets and equipment. Loans administered through SBAlliance Capital are structured with a third party lender and offer long term fixed rate financing at a traditionally low rate. For more information on SBAlliance Capital and the SBA 504 lending program, please contact Jessica Hill at (409) 838-6581 or online at www.sballiancecapital.org.
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Texas Economic Development Act
In 2001, the Texas Legislature passed HB 1200 to encourage large-scale manufacturing, research and development (R&D), and renewable energy capital investment projects in the state. It requires companies to invest a specified amount of money to qualify for a reduction in property taxes should the local school district elect to participate. The qualifying investment is determined by the tax base and maximizes at $100 million.
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Foreign Trade Zone
The Port of Beaumont and the Southeast Texas Regional Airport are designated as Foreign Trade Zones where U.S. Customs consider foreign and domestic merchandise to be outside its territory. Domestic and foreign goods can be placed in the zones without formal U.S. Customs entry, payment of duties or quota limits. www.co.jefferson.tx.us.
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Industrial Revenue Bond Program
This program issues bonds for eligible industrial or manufacturing projects to provide tax-exemot financing for land and depreciable property. The Development Coporation Act allows cities, counties, and conservation and reclamation districts to form non-profit industrial development coporations or authorities on their behalf. The purpose is to issue taxable and tax-exempt bonds for eligible projects in their jurisdictions.
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Product Development and Small Business Incubator Fund
The Product Development and Small Business Incubator Funds have been established as revolving loan programs through a $45 million bond issuance in 2005. The programs support the development of small businesses or eligible products with a statutory preference given in the areas of semiconductor, nanotechnology, biotechnology and biomedicine. For additional information on the Product Development and Small Business Incubator Funds, please contact the Governor’s Economic Development Division at (512) 936-0100. www.governor.state.tx.us.
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Industry Development Loan Program
The Texas Industry Development (TID) Loan Program provides capital to Texas communities at favorable market rates. The main objective of TID is to support projects that will stimulate the creation of jobs. TID loans can be used for a variety of purposes including community infrastructure development. TID financing is available for loans above $5,000,000.
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The Emerging Technology Fund
The Emerging Technology Fund (ETF) was created by the Texas Legislature in 2005 at the urging of Gov. Perry to provide Texas with an unparalleled advantage in the research, development, and commercialization of emerging technologies. ETF grants are awarded in the following three areas: Research Superiority Acquisition -- funds for Texas higher education institutions to recruit the best research talent in the world. Commercialization Awards -- funds to help companies take ideas from concept to development to ready for the marketplace. Matching Awards -- funds creatte public-private partnerships which leverage the unique strengths of universities, federal government grant programs and industry.
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Industrial Revenue Bonds
The State of Texas Industrial Revenue Bond Program (IRB) is designed to provide tax-exempt or taxable financing for eligible industrial or manufacturing projects as defined in the Development Corporation Act of 1979 (Act). The Act 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 jurisdictions.
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Skills Development Fund
The Skills Development Fund is a state job training program through which businesses design and implement customized job training in partnership with public community and technical colleges. The State finances the training through grants directly to the educational institutions. Per trainee benefits vary depending on the proposal. The Texas Workforce Commission administers the program. www.twc.state.tx.us/svcs/funds/sdfintro.html.
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Worker Opportunity Tax Credit
The work opportunity tax credit is a federal income tax credit that reduces the federal tax liability for private-for-profit employers. Employers can hire from nine different targeted groups and receive tax credit dependent on the group from which they hire. Maximum group credits range from $1,200 to $9,000.
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State of Texas Tax Refund
Provides a state tax credit of up to 20% of $10,000 per employee in wages paid during the first year. Employers may qualify for a state tax refund if they pay certain state taxes, pay wages during the first year of employment to employees who are Texas residents and received AFCD/TANF benefits during the month of hire, and provide and pay part of the cost of qualifying major medical insurance for the employee. www.twc.state.tx.us.
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Economic Development Refund
The Texas Tax Code provides for state tax refunds for economic development. Some Texas property owners may be eligible to receive refunds of state sales and use taxes and franchise taxes for paying local school property taxes, subject to the following requirements.Sections 111.301 through 111.304 of the Tax Code provide for state tax refunds to qualified property owners who entered into property tax abatement agreements after January 1, 1996 with a city or county, but not a school district. Property owners with tax abatement agreements entered into on or before January 1, 1996 are not eligible for these state refunds. They are also not eligible if their property is subject to an appraised value limitation, pursuant to Chapter 313 of the Tax Code.For additional information contact the Comptroller’s Property Tax Division: www.window.state.tx.us/specialrpt/stateloc05/.
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State Franchise Tax Reductions
While Texas does not have a corporate income tax as such, the corporate franchise tax has a component based on earned surplus. Earned surplus is essentially federal net taxable income plus compensation paid to corporate officers and directors if the corporation has more than 35 shareholders.
The franchise tax is imposed upon all corporations and limited liability companies that do business in Texas or that are chartered or authorized to do business in the state. The tax is based on taxable capital or earned surplus. Both components are apportioned to Texas companies using a single gross receipts factor. Taxable capital is a corporation’s stated capital plus surplus. The tax rate on taxable capital is 0.25% per year. Earned surplus includes federal net taxable income with certain modifications. The tax rate on earned surplus is 4.5%. Corporations pay the higher of the tax on taxable capital or the tax on earned surplus. Those that owe less than $100 or have less than $150,000 of gross receipts do not pay any tax, but must file a report. Texas has amended its state statutes, which affect franchise tax reports due on or after January 1, 2008. The new franchise tax is now effectively a gross margins tax. For more information about the Texas Corporate Franchise Tax, visit the Texas Comptroller of Public Accounts website, www.window.state.tx.us/taxinfo/franchise/index.html.
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Enterprise Zone
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 capital investment in economically distressed areas of the state. Local communities must nominate a company as an Enterprise Project to be eligible to participate in the Enterprise Zone Program. Legislation limits allocations to the state and local communities per biennium. The state accepts applications quarterly with deadlines on the first working day of March, June, September and December. Designated 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.
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