What Incentives Are Available for Businesses in Texas?

Texas offers a wide range of business incentives designed to lower costs, accelerate expansion, and reward investment. These programs span local, state, and federal levels, and they are one of the key reasons companies continue to relocate and grow in the Lone Star State.

Whether you are launching a startup, expanding operations, or relocating from another state, Texas provides meaningful support through financial, workforce, and infrastructure programs. In this guide, we break down the top business incentives in Texas by category, explain who qualifies, and show you how to take the next step.

Quick Guide: Incentives by Business Type

Not sure where to start? Use this guide to quickly identify which Texas incentive programs may be most relevant to your business based on your size, sector, or strategic goals.

• Startups and Small Businesses → Small Business Innovation programs
• Large-Scale Projects → Texas Enterprise Fund, Chapter 380/381 agreements
• Manufacturing or R&D → Sales tax exemptions, R&D tax credits, Skills Development Fund
• Corporate Relocations → Relocating to Texas incentives
• Energy or Clean Tech Firms → Renewable Energy incentives, Property Tax Abatements
• Tech and Semiconductor Firms → Texas CHIPS Office, federal matching grants

If your business fits more than one category, be sure to review all applicable sections to uncover overlapping incentives or layered benefits. Many programs can be combined for even greater impact.

1. Texas Enterprise Fund (TEF)

The Texas Enterprise Fund is one of the largest deal-closing funds in the country. It provides financial support to companies considering a new project in Texas when one or more states are also competing for the same project.

What it offers:

• Direct cash grants to help offset relocation or expansion costs
• Consideration based on job creation, capital investment, and projected return

Who qualifies:

• Companies creating at least 75 full-time jobs (or 25 in rural areas)
• Competitive site selection involving other states
• Significant new capital investment

This fund is often used in tandem with other types of local and state economic development support.

2. Skills Development Fund

The Skills Development Fund is Texas’s premier workforce training grant program, administered by the Texas Workforce Commission. It provides funding to help public community and technical colleges collaborate with businesses to deliver customized job training programs.

Key benefits:

• Grant funding for customized training programs developed in partnership with a local college
• Focused on upskilling current workers or training new employees to meet specific job requirements
• Average training cost is about $2,000 per trainee, but can vary by project scope and industry needs

Who it’s for:

• Texas businesses forming partnerships with public community colleges or technical schools
• Employers looking to expand or modernize their workforce skillsets in areas such as manufacturing, IT, logistics, or healthcare

The program is designed to strengthen the local workforce while supporting business growth and productivity. Interested companies should connect with TxEDC about getting started with an application. We will provide you with the guidance and technical support you need.

3. Sales and Property Tax Incentives

Sales Tax Exemptions

Texas offers sales and use tax exemptions on certain equipment and supplies used directly in manufacturing, processing, or fabricating tangible goods. This includes:

• Machinery and equipment that causes physical or chemical changes in a product
• Components that become part of the final product
• R&D equipment (if tied to eligible research activities)

Note: Businesses must provide an exemption certificate to suppliers. General-purpose tools or office items typically do not qualify.

Property Tax Abatements and Chapter 380/381 Agreements

Local governments may offer property tax reductions and other support through Chapter 380 and 381 agreements. These incentives often include:

• Temporary property tax abatements or rebates
• Grants, infrastructure support, or reimbursements
• Performance benchmarks tied to job creation or capital investment

Agreements are customized by city or county, and businesses must apply before starting the project. TxEDC can help connect you with the appropriate local economic development contacts to explore these options.

4. Research & Development (R&D) Tax Credit

Texas offers an R&D tax incentive for companies that invest in qualifying research in the state. This includes software development, engineering, and applied sciences.

Businesses can claim:

• A sales tax exemption on R&D equipment
  OR
• A franchise tax credit on eligible R&D expenses

Companies must choose one option, and eligibility is tied to federal R&D standards under IRS guidelines.

5. Small Business Innovation Support

Entrepreneurs and small businesses can tap into several programs designed to support early growth and innovation in Texas.

Top small business incentives include:

• Matching grants for SBIR/STTR federal research awards
• Access to incubators and university innovation hubs
• Technical assistance and export support for entering global markets

Explore more small business incentives available in Texas.

6. Infrastructure and Site Incentives

Businesses locating or expanding in Texas may qualify for local infrastructure support. This can include:

• Improvements to roads, utilities, water, or sewer systems
• Reimbursement for site preparation or development
• Participation in Tax Increment Financing (TIF) districts

These programs are typically negotiated through local economic development corporations (EDCs), such as those in Texas City, Allen, or Austin.

7. Federal and Strategic Industry Programs

Texas also connects businesses with competitive federal funding and incentives in high-priority industries.

Examples include:

• Texas CHIPS Office: Supporting semiconductor companies through workforce training and federal grant matching
• Clean Energy Projects: Tax credits and loan guarantees for hydrogen, solar, wind, and biofuels
• Foreign Trade Zones (FTZs): Duty deferral and cost reduction for international import/export companies

Companies working with the Texas Economic Development Corporation often receive tailored guidance for maximizing both state and federal support.

How to Apply for Texas Incentives

Each incentive program has its own process, but most require:

• A formal application submitted before your project begins
• Clear evidence of job creation, capital investment, or strategic economic impact
• Coordination with your local Economic Development Corporation (EDC) and the Governor’s Office of Economic Development and Tourism (EDT)

If you are unsure where to begin or which programs your business may qualify for, your first step is to contact the Texas Economic Development Corporation (TxEDC). As the state’s business marketing arm, TxEDC can connect you with the right regional partners, help you understand the available incentives, and guide you toward the appropriate state contacts—without delay or confusion.

Start Unlocking Incentives for Your Texas Business Today

Texas offers more than just a business-friendly tax climate. Its deep portfolio of incentives rewards job creation, fosters innovation, and reduces the cost of doing business across industries. Whether you are expanding, hiring, innovating, or relocating, there are meaningful programs to help you grow here.

Explore business incentives in Texas, and let the Texas Economic Development Corporation help you access the right resources for your next move.

Ready to start building in Texas? Contact us to find out how we can help.