Texas Chapter 313, formally known as the Texas Economic Development Act, provided property tax value limitations for qualifying capital investments in the state. The program expired on December 31, 2022, after the Texas Legislature declined to renew it. In its place, the 88th Texas Legislature passed House Bill 5 in 2023, creating Chapter 403 of the Texas Government Code as the successor program. For Texas businesses considering major capital investments in 2026, understanding Chapter 403 and how it differs from the former Chapter 313 is essential.
What Was Chapter 313
Chapter 313 allowed school districts to offer property tax value limitations to companies making significant capital investments in their jurisdiction. The limitation capped the appraised value of qualifying property for school district maintenance and operations (M&O) tax purposes, resulting in substantial property tax savings over a 10-year limitation period. The program was available to manufacturing, renewable energy, data centers, and other capital- intensive industries. Chapter 313 was one of the most valuable economic development tools in Texas, with hundreds of agreements approved before its expiration.
What Is Chapter 403
Chapter 403, created by House Bill 5, establishes the Texas Economic Development and Diversification In-State Program. It replaces Chapter 313 with a new framework administered by the Texas Comptroller of Public Accounts rather than individual school districts. The Comptroller reviews applications, determines eligibility, and issues agreements directly.
Key Differences Between Chapter 403 and Chapter 313
- Administration: Chapter 313 was administered by individual school districts negotiating directly with applicants. Chapter 403 is centrally administered by the Comptroller’s office, creating a more standardized process.
- Eligible categories: Chapter 403 applies to manufacturing, critical infrastructure, electric generation (including renewable energy), and certain other categories defined in the statute. Some categories from Chapter 313 may have different eligibility parameters under Chapter 403.
- Investment thresholds: Minimum qualifying investment amounts vary by project category and location. Rural areas may have lower thresholds than metropolitan areas.
- Tax benefit structure: Chapter 403 provides a temporary limitation on the appraised value of qualifying property for school district M&O tax purposes, similar in concept to Chapter 313 but with modified limitation amounts and terms.
- Application process: Applications are filed with the Comptroller rather than with school districts. The Comptroller evaluates applications based on economic impact, job creation, and other statutory criteria.
- Community benefit requirements: Chapter 403 includes supplemental payment requirements to school districts, which function similarly to the payments in lieu of taxes under Chapter 313 but with revised calculation methods.
Who Should Consider Chapter 403
Chapter 403 is designed for large capital investments. Businesses that should evaluate eligibility include:
- Manufacturing facilities with substantial equipment and building investment
- Data center operators building or expanding facilities in Texas
- Renewable energy developers (solar, wind) planning new projects
- Natural gas processing and petrochemical facilities
- Electric generation facilities
- Critical infrastructure projects as defined under the statute
Application Process
- Review eligibility: Confirm your project falls within an eligible category and meets the minimum investment threshold for your location.
- Prepare the application: Gather project details including projected investment amounts, construction timeline, job creation projections, and site location information.
- File with the Comptroller: Submit the application to the Texas Comptroller of Public Accounts through the designated process.
- Economic impact review: The Comptroller evaluates the application for economic merit and fiscal impact.
- Agreement execution: If approved, the Comptroller issues a Chapter 403 agreement specifying the terms of the value limitation.
Related Property Tax Programs
Chapter 403 is one of several property tax incentive tools available in Texas:
- Property tax abatements — negotiated directly with local taxing jurisdictions under Chapter 312
- Chapter 380/381 agreements — flexible incentive agreements with cities and counties
- Enterprise Zone program — state sales tax refunds for qualified projects in designated areas
- Foreign Trade Zone benefits — customs duty benefits for qualifying operations
Find Your Tax Incentive Match
Property tax incentives can represent significant savings for capital-intensive projects. Our screening report identifies which tax abatement, limitation, and incentive programs may apply to your business investment. Start your free screening →