The Texas Enterprise Zone Program (EZP) is a state sales and use tax refund program designed to encourage private investment and job creation in economically distressed areas of the state.
Who Can Apply?
Texas communities must nominate companies in their jurisdiction to receive an Enterprise Zone designation and thus be eligible to receive state sales and use tax refunds on qualified expenditures by submitting an application on the company’s behalf. Companies must contribute information to the application packet where required.Companies must meet minimum capital investment thresholds and create and/or retain jobs that employ a certain percentage of economically disadvantaged individuals, enterprise zone residents, or veterans.
Type of Incentive
State sales and use tax refund, with the maximum allowable refund—both total and per-job—determined for each company which has been awarded a designation based on the company’s planned capital investment and job creation and/or retention at the qualified business site (see table below). Companies approved for Enterprise Zone designations are eligible to apply for refunds of the state sales and use tax they have paid during the designation period on qualified expenditures, up to their maximum allowable refund. The Texas Comptroller’s Office administers all refunds. EZP designations are effective beginning 90 days prior to the deadline for the applicable application round and extend for a period of not less than 1 year and not more than 5 years from the date on which the designation is made.
Eligibility Details
For full eligibility details, see the EZP Statue, EZP Rules and/or EZP Overview links.
- Jobs counted for benefit must have an average weekly wage which meets or exceeds the average county weekly wage in the county which the qualified business site is located.
- Each community has a limited number of designations available per biennium; communities with a population at or above 250,000 have 9 designations available per biennium, while communities with a population of less than 250,000 have 6 designations available. The state may award a maximum of 105 designations statewide per biennium, and may award up to 12 designations per quarterly round.
- Employment (new and retained jobs) and capital investment commitments must be met prior to the expiration of the designation period.
- A company must first pay the applicable state sales and use tax on qualified expenditures in order to receive a refund of those taxes.
- The percentage of a project’s new employees who must meet
economically disadvantaged, enterprise zone residency, or veteran
requirement varies depending on whether the qualified business site is
located inside or outside of an Enterprise Zone—state-designated area
with economically depressed conditions.
- If located within a Zone, 25% of the company’s new employees at the qualified business site must meet economically disadvantaged, enterprise zone residency or veteran requirements
- If located outside a Zone, 35% of the company’s new employees at the qualified business site must meet economically disadvantaged, enterprise zone residency, or veteran requirements.
- Only full-time jobs qualify for EZP award consideration
- 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.
Application
The application period for the EZP occurs quarterly, with applications for the respective rounds due by 5:00 pm on the first business day of March, June, September and December.
Texas communities applying on behalf of a company must submit a complete application in paper form (via mail or in-person delivery) and non-refundable fee by the deadline for the EZP round for which they wish to be considered. Late applications will not be accepted.