Taxes and Incentives
The Baytown West Chambers County Economic Development Foundation staff is available to prepare customized informational packages on taxes and incentives specific to your needs and potential location in our area. Call us for a consultation at 281-420-2961.
Local Incentives
Real and Personal Property Tax Abatement
- Chambers County and Harris County offer property tax abatements on new value added. State statute allows for 10-year abatement at the discretion of units of local government.
- Chambers County: Ch 312 and Ch 381
- Harris County
City of Baytown Tax Abatement
- For projects locating within the city limits, the City of Baytown offers tax abatement allowed for under Chapter 312.
City of Baytown Industrial District Agreements
- For projects locating in its extra-territorial jurisdiction (ETJ), the City of Baytown offers ongoing abatements in lieu of annexation through an Industrial District Agreement (IDA) for recurring periods of seven (7) years.
ISD Appraised Value Limitation and Tax Credits – Ch. 313
- An appraised value limitation is an agreement in which a taxpayer agrees to build or install property and create jobs in exchange for a ten-year limitation on the taxable property value for school district M&O purposes and a tax credit. https://comptroller.texas.gov/economy/local/ch313/agreement-docs.php
Revitalization Incentive Zone – Baytown
- The goal of the Revitalization Incentive Zone (RIZ) program is to promote economic development, encourage the rehabilitation of affordable housing, increase property values and enhance the quality of life for Baytown residents. The program provides the waiver of certain permit/impact fees, and tax refunds, to property owners who build on, or rehabilitate property within the RIZ. http://www.baytown.org/city-hall/departments/planning-development/community-development/revitalization-incentive-zone
State Incentives
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. Texas cities, counties and communities often offer local incentives and tax abatements. For more information and additional state incentives, please visit https://businessintexas.com/.
Texas Enterprise Fund
- The Governor, with approval of the Liutenant Governor and Speaker of the House, can award cash grants for economic development, infrastructure development, community development, and/or job training programs to companies relocating or expanding in the state of Texas.
- Projects 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 75 new jobs with wages at or above the county average must be created or brought into Texas.
- Award amounts have been in the range of $1,000 up to $10,000 per job created, with an average of $5,000 per qualifying new job in Texas.
- Application fee is $1,000 with a 30-day approval process.
- Program includes claw-back provisions if the company does not meet their contratual obligations.
Skills Development Fund
- Grants are available to train employees through the state's community and technical colleges. This fund assists businesses and trade unions by financing the design and implementation of customized job training projects. Lee College, Baytown is an active participant.
- Training grants have averaged approximately $1,800 per qualifying trainee.
- The average maximum award is $500,000 per company.
- The partner college applies for the grant and administers the grant on the company's behalf.
- The Texas Workforce Commission has an approval process fo rthe current two fiscal years (Sept. 1, 2015 - Aug. 31, 2017).
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.
- Provides a zero-interest loan to fund real estate acquisition or improvements to create or retain permanent jobs in primarily rural communities and counties.
- Awards matching grant funds for public infrastructure to foster and stimulate economic development in rural downtown areas.
- Provides eligible Texas main street communities with matching grants to expand or enhance public infrastructure in historic main street areas.
- The fund provides grants for infrastructure development to create or retain permanent jobs in primarily rural communities and counties.
Federal Incentives
EB-5 Immigrant Investor Program
- The U.S. government may offer legal permanent residence (LPR, known as the “green card”) to investors, either alone or coming with their spouse and unmarried children, through the EB-5 visa. There are two ways to invest which you may use within the EB-5 category: creating a new commercial enterprise or investing in a troubled business.
New Markets Tax Credits
- Designed to encourage new or increased investment into operating businesses and real estate projects in low-income communities, the New Markets Tax Credit Program (NMTC) encourages investments that create jobs and spur additional economic development. NMTC investments have financed a wide variety of operating businesses and real estate projects, including manufacturers, health care and child care providers, charter schools, supermarkets and alternative energy companies.
State Taxes
No State Personal Income Tax
- Texas levies no individual income taxes, joining six other states with the same policy. In addition to collecting no personal income taxes, the state collects no corporate income taxes.
Texas Sales and Use Tax
- A sales tax is imposed on all retail sales, leases and rentals of most goods, as well as taxable services. The use tax is a tax on the storage, use or consumption within the state of Texas of taxable items purchased, leased or rented on which the Texas sales tax has not been paid. The use tax is applicable to taxable items purchased out-of-state and later used in Texas, and to any taxable merchandise or inventory purchased tax-free for resale which was converted to personal use. The state tax of 6.25% and any applicable local tax are due for the reporting period in which the item was converted to personal use.
Texas Sales and Use Tax Exceptions
- Texas businesses are exempt from paying state sales tax and use tax on labor for constructing new facilities.
- Other exceptions include tangible personal property which becomes a component part of a manufactured product or will be consumed in processing; sales delivered out-of-state; sales for resale; and a number of other selected items, including grocery food products and prescription medicines. Electricity and gas are exempt from sales tax if more than 50% of such energy is consumed in the manufacturing process.
- Manufacturing equipment is exempt from sales tax. This exemption is applicable to any new and/or used equipment (including replacement parts with a life span of six months or more), whether purchased in or out-of-state. This exemption also applies to manufacturer’s pollution control equipment.
Franchise Tax
- Texas levies an annual franchise tax on companies with liability protection, including partnerships, limited partnerships, limited-liability partnerships, professional associations, and business trusts, to name a few. The underlying tax base is on a business’ margin rather than net income or net worth resulting in a primary tax rate of 1%. However, trade businesses engaged primarily in wholesale or retail activities would pay 0.5% in recognition of the low profit margins basis to the industry.
Unemployment Insurance Tax
- The unemployment insurance tax is paid on taxable wages up to $9,000 per employee. Each new employer pays 2.7% or the industry average, whichever is greater. After six calendar quarters, most employers are eligible for a computed tax rate. Find out more about unemployment insurance taxes by visiting http://www.twc.state.tx.us.