Texas offers a competitive tax climate and powerful incentives to allow businesses to invest in the things that matter—growing their workforce, improving facilities and boosting their bottom line.
Highly Competitive Tax Climate: With no corporate or personal income tax, Texas has one of the lowest tax burdens in the nation. The state offers a number of other advantages for businesses, including sales tax exemption for manufacturing machinery and equipment and R&D-related materials, software, and equipment, as well as franchise tax exemption to manufacturers, sellers, or installers of solar energy devices. Property tax abatements, permitting fee waivers, local cash grants and local funding are also available to assist companies looking to relocate or expand in the state.
Tax Relief for Businesses: In 2015, during his first session in office, Governor Abbott successfully passed an across-the-board 25 percent reduction in the franchise tax—a game-changer considering Texas’ already low tax burden. Texas lawmakers also passed a meaningful property tax cut to increase the homestead exemption by $10,000. Now, with his proposed budget for the 2018-19 biennium, Governor Abbott has pledged to further cut the franchise tax by $250 million, providing additional relief for business to invest in growing their operations and workforce.
Game-Changing Incentives: Texas is home to one of the most competitive, deal-closing incentive programs in the nation—the Texas Enterprise Fund (TEF). Other powerful programs, including the Texas Enterprise Zone Program, the Skills Development Fund and additional incentives offered at the local level, help companies successfully relocate and expand in the Lone Star State without compromising their bottom line. Learn more about Texas’ available incentives and financing offerings here.
Texas has no property tax at the state level. Local governments and special taxing districts levy taxes on real and tangible personal property. All property is appraised at full market value and these taxes are assessed on 100 percent of appraised value. The total tax rate is the sum of all taxing units including cities, counties, schools, and special districts.
Several property tax exemption incentives are available for qualified businesses.
For more information on property taxes in Texas, click here.
Texas levies a sales and use tax of 6.25 percent on all retail sales, leases, and rentals of most goods, as well as taxable services. Additionally, cities, counties and other taxing jurisdictions may add to the rate for a combined state and local rate of 8.25 percent.
Sales and use tax exemptions are offered on machinery and equipment used in the manufacturing process and on natural gas and electricity when sold to commercial businesses that are "predominantly" manufacturing.
The Comptroller of Public Accounts is charged with the administration and collection of state and local sales tax from businesses operating in Texas, and also collects any franchise taxes owed by Texas corporations. The Comptroller maintains field offices in most major Texas cities to provide assistance and aid in complying with tax regulations.
Additional information on taxation in Texas is available on the State Comptroller's website at www.window.state.tx.us/taxinfo/sales/.