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Ad Valorem / Property Tax Exemption

Freeport Exemption

A community may choose to offer the Freeport Exemption for various types of goods that are detained in Texas for a short period of time. Freeport property includes goods, wares, merchandise, ores, and certain aircraft and aircraft parts.

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. For more information, please refer to Texas Constitution Article 8, Section 1-J and Administrative Code. The City of Nacogdoches currently offers Freeport Exemption; Nacogdoches County does not offer it.

A company requesting a Freeport Exemption must apply at the Central Appraisal District, and the final tax assessed for each year is based on a percentage (per the application) according to the following formula: Total COGS (for calendar year) / COGS shipped out of state within 175 days (for calendar year) = Value of Freeport goods not subject to property tax.

 

Goods-in-Transit Incentive

House Bill 621 of the 80th Texas Legislature amends the Tax Code and the Government Code to add an exemption from ad valorem taxation for goods-in-transit.To qualify for the exemption, personal property used for assembling, storing, manufacturing, processing, or fabricating purposes would have to be acquired in Texas or imported into Texas and stored at a Texas location in which the owner of the goods does not have a direct or indirect ownership interest.

The goods-in-transit would have to be transported to another location in Texas or out of state no later than 175 days after the property was acquired in or imported into the state.

Oil and gas and their immediate derivatives, aircraft, and dealer's special inventories would not qualify for the exemption.

 

Pollution Control Equipment Incentive

A Texas constitutional amendment providing an exemption from property taxation for pollution control was approved in 1993. The intent was to ensure that compliance with environmental mandates, through capital investments, did not result in an increase in a facility’s property taxes.

A facility must first receive a determination from the Texas Commission on Environment Quality (TCEQ) that property is for pollution control purposes. That positive use determination is then provided to the local appraisal district, which must accept the TCEQ’s decision and grant the property an exemption from property taxes.

To be eligible for a positive use determination, the property must have been purchased, acquired, constructed, installed, replaced, or reconstructed after January 1, 1994, to meet or exceed federal, state, or local environmental laws, rules, or regulations.