Texas Enterprise Zone Program

The amendments expand the definition of an enterprise zone allowing more taxpayers to qualify for refunds through this program. These changes affect applications for enterprise project designations filed on or after the effective date.

The definition of a qualified business has been altered to reflect the addition of new permanent jobs instead of the previously worded “employees.” A business will now qualify for the program if at least 25% of new permanent jobs located in a designated enterprise zone are held by residents of any enterprise zone, economically disadvantaged individuals, or veterans. They also qualify if at least 35% of new permanent jobs located in an area that does not qualify as an enterprise zone are held by residents of any enterprise zone, economically disadvantaged individuals, or veterans.

The definition of a qualified employee is a person who lives within 50 miles of and reports to the qualified business site and engages in the transportation of goods and services; And a person who works for and receives wages from the qualified business which employment taxes are withheld. Qualified employees include veterans honorably discharged from the Army, Navy, Air Force, Coast Guard, or Marine Corps.

The benefits of this program are received in the form of a sales and use tax refund. The franchise tax credits previously available are no longer allowed under the Enterprise Zone Program. The amount of refund available is based on the capital investment and number of new permanent jobs from the project. The refund for an enterprise zone project is $2,500 per new permanent job with a maximum refund up to $1,250,000. There are increased refunds per new permanent position for projects designated as double jumbo enterprise or triple jumbo enterprise projects of $5,000 and $7,500 respectively. A double jumbo enterprise project increases the maximum refund available to $2,500,000 and a triple jumbo enterprise project increases the maximum refund to $3,750,000.

How Does This Affect My Business?

When considering when to apply for a new enterprise zone project designation, consider whether these changes may affect your maximum refund available. Examples of some factors to consider are whether you have employees transporting goods and the number of veterans that may be hired as a result of the project.

For more information on this enterprise zone program and how it may apply your clients, please contact us.