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512-463-4070
1-800-531-5441 Fax 512-475-0345 www.window.state.tx.us |
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For Immediate Release:
Thursday, October 19, 2006 |
Contact: Dick Ellis or Misty Whited
512-463-4070 |
Comptroller Strayhorn Announces Counties Qualifying For 2007 Tax Credits
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(Austin)--Texas Comptroller Carole Keeton Strayhorn today released a list of 217 counties where businesses will have one last chance to qualify for millions of dollars in state tax breaks next year.
"Each year I review the economic health of each county and designate those that are eligible for economic development franchise tax credits," Strayhorn said. "However, 2007 will be the last year taxpayers will be able to establish new tax credits."
The franchise tax credits for economic development were enacted in 1999 by the 76th legislature and include a research credit, a job credit and an investment credit. This year, Gov. Rick Perry signed into law House Bill 3, which changes the franchise tax and also repeals the research, job and investment credits, along with many others. The new law goes into effect on January 1, 2008.
Only corporations or limited liability companies that are initial franchise tax filers in 2007 with 2007 business to report under the old law will be eligible to establish new tax credits based on the 2007 list of qualified counties.
"Though these credits have been taken away starting in 2008 by House Bill 3, I encourage all business owners in counties on this year's list to see if they qualify under the law that applies until then," Strayhorn said. "These credits saved taxpayers more than $211 million on their franchise tax reports the past five years. That's money Texas businesses can use to continue to grow."
Research Credit
The research credit is available to companies that perform qualified research activities in Texas. It is based on the firm's increase in research activities during the year compared to a base amount.
Five percent of qualified research expenses will be credited for tax reports originally due in 2002 and before 2008. The amount of the company's credit may be as large as 50 percent of its franchise tax liability. Unused credits may be carried forward for a maximum of 20 years or until December 31, 2027, whichever occurs first.
Additional credit is available for qualified research activities conducted in certain qualifying counties.
Job Creation Credit
Companies that create jobs in certain counties may qualify for a job creation credit equal to 5 percent of the wages paid to workers holding those jobs. The credit is 5 percent a year for five years beginning with the year the jobs are created. Please note however that no yearly deduction may be taken on franchise tax reports originally due on or after January 1, 2008.
To qualify, a corporation must create at least 10 new full-time jobs, pay at least 110 percent of the county's average weekly wage, pay health benefits and be engaged in manufacturing, warehousing, wholesale distribution, computer services, research, agricultural processing, or central administrative office.
The credit is limited to 50 percent of the firm's tax liability in the year that the credit is claimed. Unclaimed credits may be carried forward for a maximum of five years or until December 31, 2012, whichever occurs first.
Investment Credit
Corporations that invest at least $500,000 in machinery and equipment can qualify for a franchise tax credit equal to 7.5 percent of that investment. The credit is available in five equal installments over five years. The investment must be located in qualifying counties and in the industries listed for the job creation credit.
This credit, too, is limited to 50 percent of the firm's tax liability, and any unclaimed credits may be carried forward for a maximum of five years or until December 31, 2012, whichever occurs first.
Strategic Investment Area
The Strategic Investment Area (SIA) is a collection of counties and sub-county areas where job creation, investment and research activities by businesses can earn franchise tax credits. The SIA is determined each September by the Comptroller's Office, and the determination is effective for business activity in the following calendar year.
Comptroller Strayhorn determined that of the state's 254 counties, 217 fall entirely or partially in the state SIA for calendar year 2007.
Of those counties, 87 qualify for full-purpose SIA designation based on their relative unemployment rate and per-capita income.
The SIA designation allows a research credit bonus and permits companies engaged in manufacturing, warehousing, wholesale distribution, agricultural processing, central administrative office, computer services or research to apply for job creation and investment credits.
Another group of 128 counties qualifies only for a limited-purpose SIA designation based on population. Corporations engaged in agricultural processing in these counties can apply for the job creation and investment credits.
Two sub-county zones -- Bexar and El Paso -- qualify for the full-purpose SIA designation because of their status as federal urban empowerment zones.
Based on El Paso County's unemployment and per-capita income, the entire county is included in the SIA. Bexar County is included in the SIA only to the extent of the sub-county zone boundaries.
One sub-county zone -- Bexar -- also qualifies for full-purpose SIA treatment because of its status as a Defense Economic Readjustment Zone. Bexar County is included in the full-purpose SIA only to the extent of the sub-county zone boundary.
The counties eligible for the full-purpose SIA designation are:
Anderson |
Angelina |
Aransas |
Bailey |
Bee |
Bowie |
Brazoria |
Briscoe |
Brooks |
Calhoun |
Cameron |
Camp |
Cass |
Chambers |
Cherokee |
Childress |
Concho |
Coryell |
Cottle |
Crane |
Dawson |
Delta |
Dickens |
Dimmit |
Duval |
El Paso |
Falls |
Fannin |
Floyd |
Frio |
Grimes |
Hale |
Hall |
Hardin |
Harrison |
Henderson |
Hidalgo |
Hill |
Houston |
Howard |
Hudspeth |
Hunt |
Hutchinson |
Jasper |
Jefferson |
Jim Wells |
Jones |
Karnes |
Kinney |
Lamar |
La Salle |
Leon |
Liberty |
Lynn |
Madison |
Marion |
Matagorda |
Maverick |
Mitchell |
Morris |
Navarro |
Newton |
Nueces |
Orange |
Pecos |
Polk |
Presidio |
Red River |
Reeves |
Sabine |
San Augustine |
San Jacinto |
San Patricio |
Shelby |
Starr |
Terrell |
Terry |
Trinity |
Tyler |
Uvalde |
Val Verde |
Waller |
Ward |
Webb |
Willacy |
Zapata |
Zavala |
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The counties eligible for the limited-purpose SIA designation are:
Andrews |
Archer |
Armstrong |
Atascosa |
Austin |
Bandera |
Baylor |
Blanco |
Borden |
Bosque |
Brewster |
Brown |
Burleson |
Burnet |
Caldwell |
Callahan |
Carson |
Castro |
Clay |
Cochran |
Coke |
Coleman |
Collingsworth |
Colorado |
Comanche |
Cooke |
Crockett |
Crosby |
Culberson |
Dallam |
Deaf Smith |
DeWitt |
Donley |
Eastland |
Edwards |
Erath |
Fayette |
Fisher |
Foard |
Franklin |
Freestone |
Gaines |
Garza |
Gillespie |
Glasscock |
Goliad |
Gonzales |
Gray |
Hamilton |
Hansford |
Hardeman |
Hartley |
Haskell |
Hemphill |
Hockley |
Hood |
Hopkins |
Irion |
Jack |
Jackson |
Jeff Davis |
Jim Hogg |
Kendall |
Kenedy |
Kent |
Kerr |
Kimble |
King |
Kleberg |
Knox |
Lamb |
Lampasas |
Lavaca |
Lee |
Limestone |
Lipscomb |
Live Oak |
Llano |
Loving |
McCulloch |
McMullen |
Martin |
Mason |
Medina |
Menard |
Milam |
Mills |
Montague |
Moore |
Motley |
Nolan |
Ochiltree |
Oldham |
Palo Pinto |
Panola |
Parmer |
Rains |
Reagan |
Real |
Refugio |
Roberts |
Robertson |
Runnels |
Rusk |
San Saba |
Schleicher |
Scurry |
Shackelford |
Sherman |
Somervell |
Stephens |
Sterling |
Stonewall |
Sutton |
Swisher |
Throckmorton |
Titus |
Upshur |
Upton |
Washington |
Wharton |
Wheeler |
Wilbarger |
Wilson |
Winkler |
Wood |
Yoakum |
Young |
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The three sub-county zones eligible for the full-purpose SIA are:
El Paso Urban Empowerment Zone |
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El Paso |
San Antonio Urban Empowerment Zone |
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Bexar |
Kelly Defense Economic Readjustment Zone |
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Bexar |
To find out whether a particular business is located within one of the federal urban enterprise communities listed in the chart above, visit http://egis.hud.gov/egis/cpd/rcezec/ezec_open.htm.
For more information about available tax credits and eligibility, contact the Comptroller's Franchise Tax Division at 1-800-252-1381, or visit the Comptroller's Web site at http://www.window.state.tx.us/.
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