News and Insights

New Retention Incentives Reflect Texas Economy

Tax Development Jul 12, 2003

At the close of the 78th Texas Legislative Session, Governor Rick Perry signed into law Senate Bill 275, again expanding and easing the acquisition of incentives offered by the Texas Enterprise Zone Program. The changes create a new multi-tiered investment that rewards larger investment with double or triple tax incentives for Texas businesses for investing and keeping jobs in Texas.

At the request of Senator Frank Madla, Karin Richmond, Business Incentives Practice Leader for Ryan & Company, developed portions of the new legislation for the Texas Enterprise Zone Program. The new legislative highlights include:

  1. Qualification for retention project designation has been eased to include any combination of product line increases and/or decreases or retooling that results in an overall increase in production, a decrease in unit cost or - now - holding production levels at a steady rate;
  2. Creation of five incentive levels ranging from $25,000 and a minimum of 10 created or retained jobs to $3,750,000 with a minimum of 500 jobs, based on qualifying investment and job creation and/or retention;
  3. Businesses are eligible for project designation regardless of whether the business site is in an Enterprise Zone;
  4. As of September 1, 2003 approved businesses may receive sales tax refunds on purchases of both consumables and taxable services; and
  5. Compliance process has been streamlined to allow faster approval of refunds.

This legislation takes effect September 1, 2003 for businesses applying for designation as Enterprise Zone Projects by the Texas Office of Economic Development. Only 85 businesses will be eligible to receive these benefits during the next two years.

Proposed Enterprise
Project Investment
Maximum Jobs
for Credit
Refund Dollars
per Job
$40,000-$399,999 10 $2,500 $25,000
$400,000-$999,999 25 $2,500 $62,500
$1,000,000-$4,999,999 125 $2,500 $312,500
$5,000,000-$149,999,999 500 $2,500 $1,250,000
$150,000,000-$249,999,999 500 $5,000 $2,500,000
$250,000,000+ 500 $7,500 $3,750,000

For more information on this subject, please view Ms. Richmond's presentation Retention, Retooling, and Rethinking Incentives in a Jobless Recovery". Ms. Richmond's presentation was delivered as part of the proceedings at the International Economic Development Council's Annual Conference on September 16, 2003 in Cincinnati, Ohio. Also available is Ms. Richmond's presentation titled, "Retention, Retooling, and Rethinking Incentives," originally presented at International Economic Development Council's Glob alliances Congress on June 6, 2003.

If you have any questions regarding this information, please contact Mr. G. Brint Ryan, Managing Principal of Ryan & Company, at 972.934.0022. Mr. Ryan can also be reached via e-mail.