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Taxes & Incentives

Summary of Taxes
  • Personal Income Tax: an individual's total earnings from wages, investment interest, and other sources.
  • Corporate Income Tax: refers to a tax imposed on entities that are taxed at the entity level in a particular jurisdiction.
  • Corporate Franchise Tax: also called the “Margins Tax”; tax rate is 1% of margin for most taxable entities, and 0.5% for entities primarily engaged in retail and wholesale trades; Texas Comptroller has published detailed information on the revision in Revised Franchise Tax Overview as well as a Franchise Tax Calculator worksheet.
  • Sales & Use Tax: State 6.25%; tangible personal property and certain services; City 1%; Special Purpose District 1% (hospital); Combined Sales & Use Tax – 8.25%
  • Property Tax: 2016 City ($0.5928)  County ($0.6065)  For Taxation Summary List, see Nacogdoches Center Appraisal District. 
  • Inventory Tax: Questions concerning Inventory and Property Tax should be directed to the Nacogdoches Central Appraisal District, (936) 560-3447
  • Freeport Exemption. 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. The City of Nacogdoches offers a freeport exemption, but the County does not. For more information, contact the Nacogdoches Central Appraisal District
  • State Motor Fuels Tax: Gas ($0.20), Diesel ($0.20), Gasohol ($0.20)
  • Unemployment Compensation Tax: In 2011, the minimum UI tax rate of 0.78% is paid by nearly 213,000 employers (or nearly 63% of all experience-rated employers). An employer paying the standard minimum tax will pay $70.20 in tax per employee in CY 2011. The maximum UI rate of 8.25% is paid by only 2.2% of Texas experience-rated employers. The average UI tax rate for 2011 is 1.96%.  FAQ regarding Unemployment Taxes
  • Workers Compensation Insurance.
  • Hotel Occupancy Tax: 13% on charge for sleeping accommodations (6% state and 7% city) 
  • The Texas Comptroller of Public Accounts collects more than 60 separate taxes, fees and assessments, including local sales taxes collected on behalf of more than 1,400 cities, counties and other local governments around the state.
  • Index of Frequently Asked Questions about Texas Taxes.

 
216 West Hospital Street
Nacogdoches, TX 75961
(936) 560-3447

 

 

Texas Incentive Programs

DISCLAIMER: The material contained in this Summary of State Incentives is provided for informational purposes only and cannot be construed as a commitment. Assumptions are based on creating jobs and providing a capital investment. Total jobs and capital investment have been included as eligible costs for the various incentive programs available. However, actual jobs and capital investment may vary from the assumptions made due to final determination of program eligibility and site location. 

City Tax Incentives

Tax abatement for the city of Nacogdoches will not be ordinarily considered for projects that would develop without such incentives unless it can demonstrate higher development standards, aesthetic improvements added, and/or other development and community goals achieved through the use of abatement. Tax abatements are granted to owners of improvements on real property. If an applicant leases a facility to which an application for tax abatement will relate, the agreement shall be executed with owner of the property on which the facility is located, as well as the lessee/applicant.

Within the context of these goals, the city will, on a case-by-case basis, give consideration to providing incentives as a stimulus for economic development in Nacogdoches. It is the policy of the city that said consideration will be provided in accordance with procedures and criteria outlined in this document. Nothing herein shall imply or suggest the city is under obligation to provide an incentive and/or any extension of any incentive given to any applicant.

Sec. 94-278. Criteria for Tax Abatement.

Any request for tax abatement shall be reviewed by the city and the proposed project must conform to the general guidelines specified below:

  1. Any request must involve a development project that will add at least five new fulltime jobs or retain at least five existing fulltime jobs or increase the ad valorem value by at least $250,000 in new construction, or $50,000 in rehabilitation of an existing structure.
  2. Project shall make a substantial contribution to development efforts in the city by enhancing either additional improvements or furthering redevelopment and preservation activities within special planning areas.
  3. Project shall comply with all current environmental standards.
  4. No construction shall have begun until application is approved.
  5. Competition within the city should not be increased by the project.

Applications for tax abatement incentives should provide a written narrative detailing how project relates to the above criteria. Architect’s drawings, elevations, renderings may be required to show how some standards will be met. These drawings, elevation and renderings shall be accurate in color, façade changes and landscape plans.

The subjective criteria outlined in section 94-278 will be used to determine if it is in the best interest of the city to provide tax abatement to a particular applicant. To determine amount abated on any increment in value added to the current ad valorem value of property the following objective criteria must be met:

  1. New industry or commercial establishment.

    Project Cost or Jobs (whichever is greater)
    Percent Taxes Abated by Year
    Project Cost
    Jobs
    1st
    2nd
    3rd
    4th
    5th
    $250,000
    -
    $400,000
    or
    5+
    100%
    80%
    60%
    40%
    20%


    **Any project with costs greater than $400,000 or which create more than 6 new jobs will be individually negotiated.

  2. Rehabilitation of existing industry or commercial establishment.
    Project Cost or Jobs (whichever is greater)
    Percent Taxes Abated by Year
    Project Cost
    Jobs
    1st
    2nd
    3rd
    4th
    5th
    $50,000
    -
    $250,000
    or
    5+
    100%
    80%
    60%
    40%
    20%


    **Any project with costs greater than $200,000 or creating more than 5 new jobs will be individually negotiated.
 
Tax increment financing is a tool that local governments can use to publicly finance needed structural improvements and enhanced infrastructure within a defined area. The cost of improvements to the area is repaid by the contribution of future tax revenues by each taxing unit that levies taxes against the property. Tax increment financing may be initiated only by a city.
Workforce Training

Training

Skills Development Fund. Partner with a Training Provider.

Self-Sufficiency Fund Program. Partner with a Training Provider.

On-The-Job and Customized Training
 

Money Saving Tools for Employers

Work Opportunity Tax Credit is a federal tax credit used to reduce the federal tax liability of private-for-profit employers. Employers can hire from eight different targeted groups.

Fidelity Bonding. The Texas Workforce Commission offers free fidelity bonding services designed to eliminate bonding as a barrier to employment and alleviate employer concerns about hiring "at-risk" job applicants.

IRS Tax Credits. There are actually quite a few tax credits available to help businesses.

 

County Tax Abatement
General Criteria
 
All applications must meet the following general criteria before being considered for tax abatement:
  1. The project expands the local tax base.
  2. The project creates permanent fulltime employment opportunities.
  3. The project would not otherwise be developed.
  4. The project makes a contribution to enhancing further economic development.
  5. The project must remain in good standing with all governmental and environmental regulations.
  6. The project has not been started and no construction by the applicant has commenced at the time the application is approved.
  7. The project must not have any of the following objections:
    • Have substantial adverse affect on the provision of government service on tax base;
    • The applicant has insufficient financial capacity;
    • Planned or potential use of the property would constitute a hazard to public safety,
    • Planned or potential use of the property would create adverse impact to adjacent properties:
    • Any violation of laws of the U.S., the State of Texas, or ordinances of Nacogdoches County, Texas would occur, or
    • It is in an improvement project financed with tax increment bonds.
Specific Criteria
 
If the project in the application meets the general criteria, is a facility of a targeted enterprise, and has a capital cost that exceeds $1Million then abatement of any or all of the increased value will be considered. In no case would tax abatement exceed the maximum allowed by state law, presently 100% for 10 years. Factors to be considered in determining the portion of the increased value to be abated and the duration of the abatement agreement include, but are not limited to the following:
  1. Total amount of the increased value.
  2. Total number of jobs created.
  3. Type of jobs created.
  4. Dollar value of payroll created.
  5. Other costs and revenues associated with the application.