Taxes & Incentives

• Personal Income Tax: None
• Corporate Income Tax: None
• 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: County (0.4343/$100), City (0.55/$100), School (1.37/$100)
• 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 (state and 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.

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. 

Tax abatement for the City of Nacogdoches will not be ordinarily considered for projects which would develop without such incentives, unless it can be demonstrated higher development standards, aesthetic improvements will be added, and/or other development and community goals will be 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.

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Tax Increment Financing. 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.

1. The project expands the local tax base.
2. The project creates permanent full time 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.

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.

Self-Sufficiency Fund. The Self-Sufficiency Fund Program, administered by the Texas Workforce Commission (TWC), assists businesses by designing, financing and implementing customized job training programs in partnership with public community and technical colleges, a higher education extension service, & community-based organizations for the creation of new jobs and/or the retraining of existing workforce. The goal of the Self-Sufficiency Fund is to assist recipients of Temporary Assistance for Needy Families (TANF), Supplemental Nutritional Assistance Program (SNAP), or a parent, including a noncustodial parent whose annual wages are at or below $37,000 to obtain training, get jobs, and become independent of government financial assistance.

On-The-Job and Customized Training. Eligible employers must commit to hiring and retaining participants who successfully complete their training programs. Employers who have exhibited a pattern of not retaining participants are not allowed to continue participating in these types of training. The actual terms and duration of the training activities are formalized contractually after negotiations between the employer and the local program operator.

On-the-Job Training focuses on jobs involving the introduction of new technologies, production or service procedures; upgrading to new jobs that require additional skills or workplace literacy; or other appropriate purposes identified by the Board.

• OJT provides knowledge or skills essential to the full and adequate performance of the job.
• The employer is reimbursed up to 50 percent of the wage rate of the individual for the extraordinary costs of providing the training and increased supervision related to the training.
• OJT is limited in duration based upon the target occupation for which the participant is being trained, the participant’s prior work experience and the service strategy.

Customized Training is training:

• That is designed to meet the special requirements of an employer (including a group of employers);
• That is conducted with a commitment by the employer to employ an individual on successful completion of the training; and
• For which the employer pays for not less than 50 percent of the cost of the training.
• The employer can be in the public, private non-profit or private sector.