In 2001, the Texas Legislature passed HB 1200, creating Tax Code Chapter 313, to encourage large-scale manufacturing, research and development, and renewable energy capital investment projects to the State of Texas. It requires companies to invest a specified amount of money to qualify for an eight-year reduction in property taxes (as long as the local school district elects to participate). The qualifying investment amount is determined on a sliding scale that begins at $100 million for large urban areas and is reduced for areas with a lower tax base. Additional information on this incentive is provided by the Comptroller of Public Accounts.

The Texas Comptroller of Public Accounts offers a refund of state franchise and sales/use taxes paid by companies owning certain abated property. A company who meets the following three conditions may apply for a refund: (1) paid property taxes to a school district on property that is located in a reinvestment zone established under Chapter 312, (2) is exempt in whole or in part from property tax imposed by a city or county under a tax abatement agreement established under Chapter 312 and (3) is not in a tax abatement agreement with a school district.

The refund is equal to the amount of property taxes that would not have been paid had the company entered into a school district abatement agreement with terms identical to the city or county abatement agreement, not to exceed the net state sales and use taxes and state franchise taxes paid or collected and remitted during that calendar year. The refund amount may also be limited by a statewide appropriation per year for this refund program.

The designation of specified areas as "reinvestment zones" is a local economic development tool used by municipalities and counties throughout the state of Texas. Reinvestment zones have been used to stimulate local economies by attracting new companies and encouraging the growth of existing businesses. These zones can be created for the purpose of granting local businesses ad valorem property tax abatements on a portion of the value of real and/or tangible personal property located in the zone, for a period of up to 10 years.

Special taxation entities having jurisdiction over a reinvestment zone may participate in executed abatement agreements; however, the special taxing districts may not designate reinvestment zones or initiate tax abatement agreements. Reinvestment zones are designated by local ordinance or resolution. Incorporated cities, counties and special districts are allowed to enter into tax abatement agreements. However, school districts no longer possess this ability.

The Comptroller of Public Accounts has responsibility for the state's central registry of reinvestment zones.

A community may choose to offer the Freeport exemption for various types of goods that are detained in Texas for a short period of time. Freeport property includes goods, wares, merchandise, ores, and certain aircraft and aircraft parts. Freeport property qualifies for an exemption from ad valorem taxation only if it has been detained in the state for 175 days or less for the purpose of assembly, storage, manufacturing, processing, or fabricating.

Freeport exemptions in the Austin area are noted in the Local Incentive Programs section and on this map. The Comptroller of Public Accounts also provides a listing of taxing units that tax freeport property.

A Texas constitutional amendment providing an exemption from property taxation for pollution control equipment was approved in 1993. The intent was to ensure that compliance with environmental mandates through capital investments did not result in an increase in a facility's property taxes. A facility must first receive a determination from the Texas Commission on Environmental Quality (TCEQ) that property is for pollution control purposes. That positive use determination is then provided to the local appraisal district, which must accept the TCEQ's decision and grant the property an exemption from property taxes.

To be eligible for a positive use determination, the property must have been purchased, acquired, constructed, installed, replaced, or reconstructed after January 1,1994 to meet or exceed federal, state, or local environmental laws, rules, or regulations.

The Texas property tax code allows an exemption of the amount of the appraised property value that arises from the installation or construction of a solar or wind-powered energy device that is primarily for the production and distribution of thermal, mechanical, or electrical energy for on-site use, or devices used to store that energy.

A "solar energy device"converts solar energy into thermal, mechanical or electrical energy by a process other than burning; stores converted solar energy; or distributes converted solar energy. A "wind-powered energy device" converts wind energy into thermal, mechanical or electrical energy; stores converted wind energy; or distributes converted wind energy. Thus, eligible renewable technologies include passive solar space heat, solar water heat, solar space heat, solar thermal electric, solar thermal process heat, photovoltaics, wind, biomass, storage technologies, solar pool heating, anaerobic digestion.

Chapter 380 of the Local Government Code provides legislative authority for Texas municipalities to provide a grant or a loan of city funds or services in order to promote economic development. Cities have utilized the provisions under this law to provide a wide array of incentives that have drawn businesses and industries to locales throughout Texas. This statute basically provides for loans and grants of city funds, as well as the use of city staff, city facilities, or city services at minimal or no charge. Whether a city provides any such incentive is completely discretionary. A city may provide a Chapter 380 grant in the form of a municipal sales or property tax rebate tax rebate.