Texas offers one of the most extensive business incentive landscapes in the country. Between state-level economic development programs, federal grants, local property tax abatements, and industry-specific credits, the system is large and complex. This guide organizes every major category of Texas business incentive into a single reference.
Grants
Grants are direct funding awards that do not require repayment. In Texas, grants come from federal, state, and local sources.
- Texas Enterprise Fund: The state's deal-closing fund for large job creation and capital investment projects. Administered by the Governor's Office.
- Skills Development Fund: Workforce training grants through Texas community colleges. Administered by the Texas Workforce Commission.
- SBIR/STTR: Federal R&D grants from 11 agencies for small businesses conducting research with commercial potential.
- USDA Rural Business Grants: Grants for businesses in rural Texas communities, covering technical assistance, training, and equipment.
- CPRIT: Cancer research and product development grants from the Cancer Prevention and Research Institute of Texas.
See our complete guide to Texas small business grants.
Tax Credits and Exemptions
While Texas has no state income tax, the franchise tax system and federal tax programs provide meaningful credits and exemptions for Texas businesses.
- Franchise Tax R&D Credit: Texas businesses conducting qualified research activities can claim a credit against franchise tax liability.
- Manufacturing Sales Tax Exemption: Equipment and machinery used directly in manufacturing are exempt from state sales and use tax.
- Data Center Sales Tax Exemption: Qualifying data center operations can receive exemptions on equipment purchases.
- Federal R&D Tax Credit: Available to Texas businesses conducting qualified research, claimed on federal income tax returns.
- Work Opportunity Tax Credit (WOTC): Federal credit for employers hiring from targeted groups including veterans and long-term unemployed individuals.
See our complete guide to Texas business tax credits.
Government-Backed Loans
Government-backed loans reduce lender risk and improve access to capital for small businesses that might not meet conventional lending requirements.
- SBA 7(a) Loans: The most common SBA loan program, providing up to $5 million for working capital, equipment, and real estate.
- SBA 504 Loans: Long-term fixed-rate financing for major assets like real estate and heavy equipment.
- SBA Microloans: Loans up to $50,000 through nonprofit intermediary lenders for startups and small businesses.
- TSBCI: The Texas Small Business Credit Initiative provides capital access programs through participating lenders.
- USDA B&I Loan Guarantees: Loan guarantees for businesses in rural Texas communities.
See our complete guide to Texas small business loans.
Property Tax Abatements
Texas cities and counties can offer property tax abatements to businesses making capital investments within their jurisdictions. Abatements reduce or eliminate property taxes on new construction or improvements for a set period, typically 5-10 years.
- Abatements are negotiated individually with the taxing jurisdiction
- Chapter 312 of the Texas Tax Code governs municipal abatements
- Chapter 313 (now expired) previously governed school district abatements; the successor program is Chapter 403
- Many Texas cities publish abatement guidelines with minimum investment and job creation thresholds
Enterprise Zone Program
The Texas Enterprise Zone Program provides state sales and use tax refunds for businesses that locate or expand in economically distressed areas. Cities and counties nominate eligible projects, and the state approves designations. Refunds can reach up to $2,500 per job created within the zone.
Tax Increment Financing (TIF/TIRZ)
Tax Increment Reinvestment Zones capture growth in property tax revenue within designated areas and reinvest it in public improvements. Businesses within a TIRZ benefit from improved infrastructure and may receive direct development incentives, depending on the zone's plan.
Procurement Preferences
Certification programs create contracting advantages for eligible businesses:
- Texas HUB Certification: State procurement preferences for historically underutilized businesses. See our HUB certification guide.
- SBA 8(a) Program: Federal contracting preferences for socially and economically disadvantaged businesses.
- HUBZone: Federal contracting preferences for businesses located in historically underutilized business zones.
- City M/WBE Programs: Major Texas cities operate their own minority and women business enterprise certification programs with local contract participation goals.
Export Assistance
Texas businesses selling internationally can access export assistance programs including STEP reimbursement grants, Ex-Im Bank insurance and financing, and trade mission support. See our export assistance guide.
How to Navigate the System
The breadth of Texas business incentives is an advantage, but it also creates complexity. Most business owners are eligible for programs at multiple levels of government simultaneously. The practical challenge is identifying which programs apply to your specific situation — your industry, location, size, and business activities.
Our free screening report checks your business against 150+ verified programs — grants, tax credits, loans, and incentives — and shows you which ones may match. Start your free screening →