Texas Revamps Property Tax Incentive for Qualifying Projects
On June 7, 2023, Texas Gov. Greg Abbott signed the Texas Jobs, Energy, Technology, and Innovation Act (H.B. 5) to revive and expand expired chapter 313 of the Texas Economic Development Act, which provided property tax incentives related to the school district portion of the tax to businesses expanding into Texas. The new law’s enhancements to the program include adding public input to the approval process, standardizing job creation and salary requirements, and increasing oversight measures. The updated incentive plan, which is expected to begin January 1, 2024, excludes wind, solar, and battery power storage projects and disallows school districts from requiring direct supplemental payments. It is included as chapter 403 of the Tax Code and will expire in 10 years unless renewed by legislation.
Under the new plan, eligible projects would receive a 50% abatement on school district maintenance and operations property taxes for 10 years; projects located in opportunity zones could receive an abatement of up to 75%. In exchange, eligible companies must commit to making investments and creating new jobs. Those requirements are based on county population:
- Projects in counties with populations of at least 750,000 must create at least 75 jobs and invest at least $200 million.
- Projects in counties with populations between 250,000 and 750,000 must create at least 50 jobs and invest at least $100 million.
- Projects in counties with populations between 100,000 and 250,000 must create at least 35 jobs and invest at least $50 million.
- Projects in counties with populations under 100,000 must create at least 10 jobs and invest at least $20 million.
The new incentive limits qualifying projects to companies investing in manufacturing, hydrogen fuel production, carbon capture facilities, natural resources development, thermal power generation, semiconductor technologies, and research and development. The abatement may also be available to projects looking to build or expand “critical infrastructure,” but bans participation by renewable energy companies and battery power storage projects.
| Program | Program Updates |
| Texas Jobs, Energy, Technology, and Innovation Act (Chapter 403 Incentive) | The new incentive standardizes job and salary requirements, increases oversight, and allows for public input. It is expected to begin January 1, 2024. The plan excludes renewable energy, wind, solar, and battery power storage projects and disallows supplemental payments made by companies to school districts. The incentive allows for an abatement of 50% on the maintenance and operations portion of the school district property tax. |
For more information, please a member of BDO’s national Credits & Incentives team, which has resources across the U.S. The team also has strong relationships with economic development officials and can answer any questions you may have about the program updates described in this alert.
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