Texas is one of the best states for businesses. The Lone Star State boasts low taxes, great infrastructure, and a large, capable workforce. Texas also provides some great economic development tools for businesses, such as the Texas Enterprise Zone Program, a state sales and use tax refund program designed to encourage private investment and job creation in the state’s economically distressed areas. Texas Enterprise Zones can provide businesses with great opportunities for growth. Here’s what every business owner should know about Texas Enterprise Zones:
- How to get an Enterprise Zone Designation: Local communities nominate a new or expanding company as an enterprise project by submitting an application on the company’s behalf. As part of the process, companies contribute information to the application where required. The application period occurs quarterly, with submissions due on the first business days of March, June, September, and December.
- Eligibility: There are some requirements for EZP approval. Prospective companies must meet minimum capital investment thresholds and create or retain jobs that employ a certain percentage of economically disadvantaged individuals, enterprise zone residents, or veterans. Only full-time jobs qualify for EZP awards, and the jobs must have average weekly wages that meet or exceed the average local county weekly wages. In addition, jobs must be maintained through the end of the designation period, or for at least 3 years after the date on which tax benefits are received—whichever is later.
- Designation Period: The enterprise project designation is for an expansion or relocation from out-of-state, an expansion, renovation, or new construction, or other property controlled by a qualified business. The designation period is an amount of time approved by the Bank, with set beginning and ending dates for each EZP. This period of time may not be for a period of less than one year or more than 5 years from the date of designation.
- Incentives: Approved enterprise projects can apply for state sales and use tax refunds on qualified expenditures. The total amount of any refund will be predicated on investment amount and number of jobs created or retained. The maximum refund per job is between $2500 and $7500, depending on the level of investment made by the company. The Texas Comptroller’s office administers all refunds. Local communities may also offer benefits such as tax abatement, tax increment financing, and one-stop permitting to companies under the EZP.
- Costs: As with many worthwhile ventures, there are some financial basics to consider when applying for the EZP. When companies apply, there’s a non-refundable fee for consideration of an enterprise project, based on the proposed project status. Additionally, enterprise zones will be assessed 3% on the amount of any refund benefit received under the program. It’s also important to note that companies must pay applicable state sales and use taxes on qualified expenditures in order to receive a refund.
Whether you’re thinking about a business expansion or a job retention project in Texas, it could prove beneficial to consider applying for the Texas Enterprise Zone Program. For more information, visit The Texas Enterprise Zone Program’s website: https://gov.texas.gov/business/page/texas-enterprise-zone-program.
