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Business Climate

Tax Rates

The State of Texas is attractive to many businesses due to competitive tax rates and no state personal income tax.  At the local level, revenues are generated primarily by an ad valorem property tax and local sales tax.

City Tax Rate $0.68527 per $100
Independent School District Tax Rate $1.46 per $100
County Tax Rate $0.356962 per $100
Special District Rate $0.05279 per $100 FMLR
Special District Rate $0.034 per $100 Hill College
Special District Rate $ per $100
Special District Rate $ per $100
Special District Rate $ per $100
Total $2.538082 per $100
Tax Abatement Available Yes
Economic Development Sales Tax Yes
Enterprise Zone Yes
Other Economic Stimulants

Johnson County Tax Abatements

Tax Abatements: Johnson County is committed to the promotion of high quality development throughout the area. On a case-by-case basis, the County and each of the cities in the area will give consideration to providing tax abatements on the increment in value added to a particular property by a specific development proposal which meets the economic goals and objectives of the particular city and Johnson County.

Texas Capital Fund

The Texas Capital Fund consists of three programs (Infrastructure Grant, Real Estate Development and Main Street) that are designed to promote growth in rural non-entitlement areas generally defined as cities with fewer than 50,000 residents or counties with less than 200,000 residents. Awards are made through eligible cities and counties to assist businesses that employ low to moderate-income persons.

Infrastructure Grant Program

This program promotes economic development in rural areas by providing financial incentives to assist businesses wishing to locate or expand in their communities. Funds may be used for construction and/or improvements of water or wastewater facilities, public road construction, natural gas line services, rail spurs, and electric power services. Minimum and maximum awards are $50,000 and $750,000, respectively. Awards may not exceed 50 percent of the total project cost. See ìDepartments and Agenciesî Finance for contact information.

Real Estate Development Program

This program promotes economic development in rural areas by providing financial incentives to assist businesses wishing to locate or expand in their communities. Funds may be used to acquire, construct, or rehabilitate real estate to support a for-profit or a non-profit entity willing to commit to creating or retaining jobs primarily for low or moderate income persons. Minimum and maximum awards are $50,000 and $750,000, respectively. Awards may not exceed 50 percent of the total project cost. See ìDepartments and Agenciesî Finance for contact information.

Main Street Program

This program fosters and stimulates the development of small businesses by providing financial assistance to non-entitlement ìMain Street Citiesî (designated by the Texas Historical Commission) for public improvements. Proceeds may be used for the acquisition of land for proposed improvements; architectural, engineering, and design costs for construction or rehabilitation of such improvements; and public improvements integral to the development of the project, including water or wastewater facilities, public road construction, natural gas line services, electric power services, drainage, lighting, sidewalks, public parking lots, and activities required to eliminate architectural barriers for the handicapped. Minimum and maximum awards are $50,000 and &150,000, respectively. Awards may not exceed 50 percent of the total project cost. See ìDepartments and Agenciesî Finance for contact information.

Texas Leverage Fund

The Texas Leverage Fund (TLF) is an ìeconomic development bankî that offers financing to communities that have passed the economic development sales tax. The Texas Leverage Fund may be used to provide financing to local businesses for industry expansion or recruitment, industrial parks establishment, or certain community project financing. With the assistance of Bank One, Texas, the TLF was capitalized with $25 million in State of Texas taxable commercial paper. The Fund allows communities to put sales tax money to work quickly, make decisions at the local level, and monitor the project on an on-going basis. Eligible projects include the development or expansion of manufacturing and industrial enterprises, as well as the improvement of infrastructure tied to specific businesses. See “Departments and Agencies” Finance for contact information.

Reinvestment Zones

The designation of specified areas as ìreinvestment zonesî is a local economic development tool used by municipalities and counties throughout the state of Texas. Reinvestment zones have been used to stimulate local economies by attracting new companies and encouraging the growth of existing businesses. These zones can be created for the purpose of granting local businesses ad valorem property tax abatements on a portion of the value of real and/or tangible personal property located in the zone, for a period of up to 10 years.

Special taxation entities having jurisdiction over a reinvestment zone (i.e., school districts, utility districts, and community college districts) may participate in executed abatement agreements; however, the special taxing districts may not designate reinvestment zones or initiate tax abatement agreements. Reinvestment zones are designated by local ordinance or resolution. See ìDepartment and Agenciesî Comptroller for contact information.

Economic Development Sales Tax

Since 1989, voters in many Texas cities have had the option of imposing a local sales and use tax to help finance their communitiesí economic development efforts. Cities may adopt an economic development sales tax under Section 4A or Section 4B of the Development Corporation Act of 1979. Section 4A sales tax is eligible to cities in a county with a population of less than 500,000 if the new combined local sales tax rate would not exceed 2 percent and the city is not part of a rapid transit authority. A city that is eligible to adopt a sales tax under Section 4A may hold an election to adopt the tax under Section 4B if the new combined local sales tax rate would not exceed 2 percent. A city located in a county with a population of 750,000 or more is also eligible, but there is an additional eligibility requirement: the current combined sales tax rate cannot exceed 7.25 percent at the time of the election. A city with a population of 400,000 or more that is located in more than one county and has a combined sales tax rate that does not exceed 8.25 percent may also enact the Section 4B sales tax.

Section 4A tax proceeds may be used to fund any of thirteen types of expenditures under the Development Corporation Act. Two of the categories are pursuant to authorization under Section 4A of the Act. Under Section 4A, the Act specifically allows industrial development corporations to undertake projects, the primary purpose of which is to provide business airports and port-related facilities. The remaining eleven categories for expenditure of Section 4A tax proceeds are: manufacturing and industrial facilities, recycling facilities, distribution centers, small warehouse facilities, closed or realigned military bases, related facilities, facilities to promote new and expanded business development, facilities to promote job creation and retention, job training facilities, educational facilities, and targeted infrastructure.

The Development Corporation Act provides a wide variety of purposes for which Section 4B tax proceeds may be expended. Section 4B tax proceeds may be spent on land, buildings, equipment, facilities and improvements for items that fit under the definition of ìprojectî under Section 2(11)(A) of the Act. The Attorney General has concluded that the term ìprojectî encompasses the land buildings, equipment, facilities, and improvements that are suitable for any of the following: promotion of manufacturing and industrial facilities, recycling facilities, distribution centers, small warehouse and storage facilities, air or water pollution control facilities, development or redevelopment of closed military bases and facilities related to these projects, facilities to promote new and expanded business development, facilities to promote job creation and retention, job training facilities, education facilities and facilities for use by institutions of higher education, targeted infrastructure, athletic facilities parks and related public space improvements, tourism and entertainment facilities, commercial facilities, certain public facility improvements, transportation improvements, infrastructure improvements, other business-related improvements.

There are 431 cities that have passed the 4A and/or 4B Economic Development Tax that have generated an estimated total of $235,952,837 available for economic development purposes. See ìDepartment and Agenciesî Comptroller for contact information.

Application for Project Assistance
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