Imagine cutting your business expenses by $1.2 million in just one year—that’s exactly what companies moving to Texas are doing in 2025. With over 734 major corporate relocations since 2020, including Tesla, Oracle, and Hewlett Packard Enterprise, Texas isn’t just business-friendly—it’s a business magnet.
This unprecedented business migration has generated over 240,000 new jobs and $34.2 billion in capital investment, cementing Texas’s decade-long position as Site Selection magazine’s #1 destination for business relocation and why businesses moving to Texas is a trend.
Why Businesses Moving to Texas Outperform Their Competitors in 2025
For 20 years, Texas has been ranked the #1 state for business—and it’s no surprise why. With zero corporate income tax, pro-business policies, and some of the lowest operating costs in the U.S., companies are thriving here
The state’s economic strength continues to attract major companies. Hewlett Packard moved its headquarters to Houston from San Jose. Oracle chose Austin over Redwood City, and Amazon picked Houston as one of its tech hubs.
Texas offers a highly skilled 14-million-strong workforce, adding jobs at a 1.9% rate in 2024.
Business costs stay well below those of other major hubs, contributing to lower operating costs for companies. Texas ranks 15th in the nation for affordable living, with monthly expenses averaging $39,661. This cost advantage extends to commercial properties, especially in the TexAmericas Center, where tax rates are 20-30% lower than those of other Texas markets.
These thriving industries power the state’s growth:
-
- Oil and gas production (Texas leads U.S. production)
- Renewable energy (Top state in wind generation)
- Corporate services (1.5 million workforce)
- Technology (Leading tech exporter nationwide)
- Construction (763,000 employees)
Texas supports businesses with excellent transportation networks. The state has committed $83 billion to new road projects. Its network of nearly 480,000 miles of pipelines [8] helps maintain Texas’s position as the nation’s leading exporter.
Cost Comparison: Texas vs California. Why Your Business is Better Off In Texas
Texas offers significant tax benefits to small businesses that relocate there. Businesses earning less than $2.47 million in 2024 and 2025 won’t pay franchise tax. This tax-free threshold makes Texas an attractive destination for small and growing companies.
Franchise Tax Exemptions
Several business types don’t need to pay franchise tax:
- Sole proprietorships (except single-member LLCs)
- General partnerships owned by individuals
- Veteran-owned businesses during their first five years [10]
Startup Tax Advantages
New businesses can take advantage of these tax benefits:
The Texas Small Business Credit Initiative’s $472 million fund boosts small business development [14]. This program helps underserved businesses and those impacted by COVID-19.
Businesses making between $2.47 million and $20 million can use a simpler tax calculation. Using the E-Z Computation Report form, they pay 0.331% on their Texas revenue.
Small businesses can access revolving loans through the Texas Product Development & Small Business Incubator Fund [11]. The Capital Access Program helps businesses that struggle to get conventional loans [11].
Cost Comparison: Why Businesses Moving to Texas from California Save Millions
Moving from California to Texas can save businesses 20% on their operating expenses [15].
Operating expense differences
Austin’s office utilities cost half of what companies pay in San Francisco [15]. Companies that relocate can reduce their annual payroll expenses by 15-20% [15]. FileTrail exemplifies these savings – the company cut its salary costs by 25% while growing its workforce to 40 employees after moving to Texas [15].
Tax burden analysis
The tax structure between these states is different. Texas residents pay no state income tax, while Californians face rates ranging from 1% to 13.3% [16]. Corporate taxes also favor Texas businesses with a franchise tax of 0.375% for retail/wholesale and 0.75% for other industries, compared to California’s 8.84% corporate tax rate.
Texas property tax rates exceed California’s at 1.69% versus 0.73% [18]. Lower property values balance this difference effectively. California’s sales tax reaches 10% in some areas, while Texas keeps its combined state and local sales tax at 8.25% maximum [16].
Real estate costs
Labor expenses
The workforce brings substantial savings to businesses. Texas households earn a median income of $75,780, compared to California’s $91,905 [19]. Employee benefits cost less in Texas due to lower unemployment insurance rates, and the state doesn’t require disability insurance taxes [16].
These cost benefits extend further. Texas boasts a 4.1% unemployment rate while California sits at 5.4% [20]. This larger workforce helps companies fill positions quickly. Texas added 327,400 jobs in 2024, achieving a 2.3% growth rate.
MIT’s analysis shows Texas costs less than California in most categories including food, childcare, housing, transportation, civic engagement, internet, and mobile services [19]. The overall cost of living tells the story clearly – Texas scores 93.9 compared to California’s 149.9 [18].
Major Incentives for Moving Your Business to Texas
The Texas Enterprise Fund (TEF)—North America’s largest deal-closing incentive program—has awarded businesses moving to Texas over $1.07 billion across 213 grants, generating 114,000+ new jobs since 2004. In 2024-2025, TEF approved a record $186 million in relocation incentives, averaging $9,500 per job created. To qualify, companies must create at least 75 jobs in urban areas or 25 in rural regions. With approval rates reaching 73% for high-growth industries, Texas makes business expansion easier than ever
Under the Texas Economic Development Act (Chapter 313), property tax reductions are available for manufacturing, research, clean energy, and data center projects. Companies that invest more than $10 million can receive a 10-year limitation on appraised property value. Through this program, businesses saved $1.5 billion in property taxes in 2023.
The Skills Development Fund helps businesses with customized training programs and workforce training grants. Last year’s training grants totaled $48.5 million. Local college partnerships allow companies to get up to $500,000 per business. These programs boosted manufacturing firms’ productivity by 35%.
Sales tax exemptions cover:
- Manufacturing equipment and machinery
- Research and development materials
- Data center equipment
- Renewable energy components
Local governments granted $2.3 billion in property tax abatements that reduce taxes up to 100% for 10 years.
Growing companies can access support through the Texas Small Business Credit Initiative with:
- Direct lending programs capped at $5 million per business
- Loan guarantees covering 80% of principal
- Venture capital matching funds
- Collateral support up to $1 million
This program helped small businesses access $472 million in funding. Companies with 2+ years of operation saw an 85% approval rate. Manufacturing firms held priority status and received 40% of total funds.
Technology companies secured $25 million last year through the Product Development Fund, which offers loans at 2% below market rate [13,14]. The Capital Access Program works with 42 private lenders across the state and maintains a 92% loan repayment rate.
The Texas Economic Development & Tourism Office offers additional resources and support for businesses looking to relocate or expand in Texas. They provide information on financing options, industry-specific grants, and other economic development initiatives.
How to Qualify for Texas Business Incentives
Texas businesses need to meet specific criteria to qualify for state incentives. The state bases its decisions on how many jobs you create, the amount you invest, and your industry type.
Key Qualification Factors
Each program has its own minimum investment requirements:
- Texas Enterprise Fund: $1 million minimum investment
- Chapter 313: $10 million for manufacturing projects
- Skills Development Fund: $500,000 minimum project value
Your location determines job creation targets:
- Urban areas just need 75 new full-time positions
- Rural zones call for 25 new positions
- Jobs with higher wages get a closer look
Projects that show clear economic benefits stand out. Texas prioritizes companies that bring new money through exports or outside investment. Manufacturing and technology projects get faster reviews.
The Skills Development Fund has tougher rules. Your company must work with local colleges and show detailed training plans. The state looks at how well you’ve handled workforce development before.
Tax breaks on property need county approval first. Local tax authorities look beyond the economic numbers. They consider how your project affects the environment and local infrastructure before making decisions.
How Texas ED Connection Can Help Your Business Relocate Smoothly
Is your business growth being stifled by excessive regulations or an unfavorable business climate? Many companies are discovering that relocating to Texas offers the opportunity to thrive in one of America’s most business-friendly environments. However, navigating a business relocation can be complex and overwhelming—that’s where Texas EDConnection comes in.
Texas EDConnection has streamlined the relocation process into four manageable steps:
- Initial Consultation: The process begins with a simple call where you share your business story—your current challenges, future goals, and what you’re looking for in a new location. This conversation helps Texas EDConnection understand exactly what your business needs to succeed.
- Statewide Partner Network Activation: After understanding your requirements, Texas EDConnection distributes a Request for Information (RFI) to their extensive network of partners throughout Texas. This network includes economic development professionals who have intimate knowledge of their local business landscapes.
- Community Information Collection: Partners from communities across Texas will respond with detailed information about what their locations can offer your business—from tax incentives and available properties to workforce demographics and quality of life factors.
- Exploration and Decision Support: With options in hand, you can choose your level of support. Texas EDConnection can facilitate site visits and community introductions, or you can review the information independently and arrange your own exploration. The choice is yours, giving you control over the process.
The relocation process begins with a simple phone call to discuss your situation and goals. From there, their network goes to work finding the perfect Texas location for your business’s next chapter.
Whether you’re a small business owner feeling squeezed by your current location or a larger enterprise looking for expansion opportunities, Texas EDConnection provides the connections and guidance to make your move to Texas as smooth as possible.
FAQs About Businesses Moving To Texas
What specific tax benefits do businesses moving to Texas receive immediately?
Businesses moving to Texas immediately eliminate state income tax (saving up to 13.3% compared to California), qualify for franchise tax exemption if earning under $2.47 million annually, and access industry-specific exemptions worth $12,000-$65,000 per employee depending on industry and location. Additionally, the Texas Moving Image Industry Incentive Program offers 22.5% rebates for qualified production companies, while data centers receive 100% sales tax exemptions on equipment purchases.
How does the cost of operating a business in Texas compare to California?
Businesses typically save about 20% on overall operating expenses when relocating from California to Texas. This includes lower costs for utilities, real estate, and labor. The absence of state income tax in Texas also contributes to the cost savings.
What major incentives does Texas offer to attract businesses?
Texas provides several incentives, including the Texas Enterprise Fund for job creation, property tax reductions through the Texas Economic Development Act, customized training grants via the Skills Development Fund, and various tax exemptions and abatements for qualifying businesses.
How can a business qualify for Texas incentives?
Qualification typically depends on factors such as job creation numbers, capital investment amounts, and industry type. Businesses must meet minimum investment thresholds, create a specified number of jobs, and submit detailed documentation, including financial statements and business plans.
What assistance is available for businesses relocating to Texas?
Professional relocation services offer comprehensive support, including evaluating financial incentives, assisting with site selection, aiding in workforce development planning, and helping navigate the application process for various state programs. These services can significantly streamline the relocation process and increase the chances of securing incentives.
About the Author – A Texas Economic Develop Expert in Relocating Businesses.
Dave Quinn is a business relocation consultant with over 25 years of experience helping companies expand to Texas. As a speaker, advisor, and economic development expert, he’s helped businesses secure millions in incentives and relocate successfully. When he’s not assisting businesses, he enjoys grilling brisket and coaching youth sports.
Want to connect? Let’s chat! 🚀
