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Enterprise Zones

The Texas Enterprise Zone (EZ) Program provides State Sales & Use Tax benefits to targeted businesses located within an Enterprise Zone. Select companies can receive from $2,500 to $7,500 in sales tax refunds per job they create and/or retain, depending on the amount of capital investment made at the project location.

Level of Capital InvestmentMax # of jobs allocatedMax potential refund Max refund per job allocated
$40,000 to $399,99910$25,000$2,500
$400,000 to $999,99925$62,500$2,500
$1,000,000 to $4,999,999125$312,500$2,500
$5,000,000 to $149,999,999500$1,250,000$2,500

If a project meets the following criteria, the project is classified as a Double Jumbo Project, and qualifies the project for a $5,000 maximum refund per job allocated:

Level of Capital InvestmentMax # of jobs allocatedMax potential refund Max refund per job allocated
$150,000,000 to $249,999,999500$2,500,000$5,000

If a project meets the following criteria, the project is classified as a Triple Jumbo Project, and qualifies the project for a $7,500 maximum refund per job allocated:

Level of Capital InvestmentMax # of jobs allocatedMax potential refund Max refund per job allocated
$250,000,000 or more500$3,750,000$7,500


What Defines an Enterprise Zone?

Historically, enteprise zones were designated by the State through an application process that defined the boundaries of the zone. The zones had a term of 7 years and could be re-designated if certain criteria were met. Due to the complexity of this model and lengthy application process, the State Legislature redefined the criteria for establishing an enterprise zone.

Today, an enterprise zone is a census tract block group that has 20% or more poverty rate based upon the decennial census federal poverty level information, a distressed county, a federally designated zone or renewal community. An enterprise zone is automatically a reinvestment zone for tax abatement and tax increment financing if a community chooses to designate it as such a zone.

Application Process

Local communities may provide incentives such as tax abatement, fee waivers, one stop permitting, etc. to businesses inside a zone and to enterprise projects. In addition, communities may nominate a qualified business as an Enterprise Project. An enterprise project may be located inside or outside a zone area. Enterprise Projects outside a zone area have a higher threshold of hiring economically disadvantage or enterprise zone residents. Communities with a population of less than 250,000 may nominate up to four businesses for designation as enterprise projects during a state biennium. Under certain circumstances, such jurisdictions may receive up to two bonus projects based on availability. Communities with a population of 250,000 or greater have up to six designations available during the state biennium. These designations allow businesses to obtain state sales and use tax benefits on qualifying items for up to five years from the enterprise project designation date. Only 85 enterprise project designations may be granted during each state biennium.

Applications are accepted quarterly with the deadlines on the first business day of March, June,September, and December. Applications received after 5:00 p.m for each quarterly application deadline date will not be considered for that current round.

PROJECT REQUIREMENTS:

  • Communities may nominate projects, for a designation period up to five years, noninclusive of a 90-day window prior to the application deadline. Employment and capital investment commitments must be incurred and met within this timeframe.
  • Projects may be physically located in or outside of an Enterprise Zone. If located within a zone, the company commits that 25% of its new employees will meet economically disadvantaged or enterprise zone residency requirements. If located outside of a zone, the company commits that 35% of its new employees will meet economically disadvantaged or enterprise zone residency requirements.
  • Under limited statutory provisions, an enterprise project designation may be granted for job retention.

Project Example

A company in Tyler, employing 50, considers relocating to Kansas or expanding their operations in Tyler, TX. The company is located within a Census block with a poverty level of 25%, qualifying it for enterprise zone credits. Corporate leaders assess the value of the community and the benefits of the Enterprise Zone (EZ) program and decide to stay in Tyler. The location expansion will generate $3.5 million in capital expenditures and create 100 new jobs.

Based on the EZ funding model, the project's capital expenditures fall within the $1 million to $4.99 million tier, allowing the company to receive $2,500 in refunds per job allocated with a maximum of 125 jobs allocated.

The company will spend $218,750 in State sales taxes ($3.5 million x 6.25% tax rate) for capital expenditures. Fifty jobs will be retained and 100 new jobs will be created, for a total of 150 jobs affected by the project. However, the project's tier level only allows for a sales tax refund based on a maximum of 125 jobs allocated. Therefore, the company is elegible to receive $312,500 in sales tax refunds (125 jobs x $2,500). Since the company's actual sales taxes are less than the maximum, all of the State sales taxes on the company's project capital expenditures are refunded!

Download

The State of Texas Attorney General's office produces an annual Economic Development Handbook that provides detailed information about all available funding options available in the State of Texas. The publication is only available online and can be downloaded in PDF format.

Contact Information

For more information regarding the enterprise zone program, please contact:

Tyler Economic Development
Council
P.O. Box 2004
Tyler, Texas 75710
800.648.9537