Incentives

Summary

Foreign-Trade Zones (FTZ) are secure areas under U.S. Customs and Border Protection (CBP) supervision that are generally considered outside CBP territory upon activation. Located in or near CBP ports of entry, they are the United States' version of what are known internationally as free-trade zones.

Texas is a leader in foreign trade zones, boasting over 35 zones strategically located across the state. These zones, overseen by U.S. Customs and Border Protection, offer unique benefits for businesses engaged in international trade. 
Foreign Trade Zone Benefits in Mesquite:An FTZ, under U.S. Customs and Border Protection (CBP), acts as a secure area outside U.S. customs territory. This unlocks substantial benefits:

• Duty Deferral: Delay customs duties on imported goods until entering the U.S. market, boosting cash flow.
• Reduced/Eliminated Duties: Eliminate duties on re-exported goods or those used for manufacturing within the zone.
• Inventory Tax Elimination: Avoid state and local inventory taxes on goods stored in the FTZ.

Mesquite's FTZ Edge

Mesquite's strategic location and streamlined customs processes make it ideal for businesses of all sizes. Whether you're an importer, exporter, manufacturer, or distributor, the FTZ empowers you to:

• Cut Operating Costs: Save on duties and taxes, maximizing your profits.
• Boost Efficiency: Enjoy faster processing through streamlined customs procedures.
• Increase Profitability: Gain a competitive edge by reducing landed costs.

Mesquite's Free Zone, or Foreign Trade Zone, is a strong advantage for businesses seeking global expansion. For details on specific benefits and eligibility, contact our team.

The Advantages of Using a Foreign-Trade Zone

CBP duty and federal excise tax, if applicable, are paid when the merchandise is transferred from the zone for consumption.

While in the zone, merchandise is not subject to U.S. duty or excise tax. Certain tangible personal property is generally exempt from state and local ad valorem taxes.

Goods may be exported from the zone free of duty and excise tax.

CBP security requirements provide protection against theft.

Merchandise may remain in a zone indefinitely, whether or not subject to duty.

The rate of duty and tax on the merchandise admitted to a zone may change as a result of operations conducted within the zone. Therefore, the zone user who plans to enter the merchandise for consumption to CBP territory may normally elect to pay either the duty rate applicable on the foreign material placed in the zone or the duty rate applicable on the finished article transferred from the zone whichever is to his advantage.

Merchandise imported under bond may be admitted to a FTZ for the purpose of satisfying a legal requirement of exporting the merchandise. For instance, merchandise may be admitted into a zone to satisfy any exportation requirement of the Tariff Act of 1930, or an exportation requirement of any other Federal law (and many state laws) insofar as the agency charged with its enforcement deems it so.

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Summary

Q. What is the New Markets Tax Credit and how does it work?

A. The credit provides an incentive for investment in low-income communities. The US Department of the Treasury competitively allocates tax credit authority to intermediaries that select investment projects. Investors receive a tax credit against their federal income tax.

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Summary

Opportunity Zones encourage private-sector investment in qualified zones by offering significant tax benefits, including tax deferral and exclusions of deferred gains over time.

What is an Opportunity Zone?

An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service.

This initiative is part of a federal effort to encourage long-term investments in underserved areas, fostering growth and revitalization.

Mesquite, located just 15 minutes from downtown Dallas, is home to several Texas Opportunity Zones, providing investors with an ideal location to take advantage of this program.

How Do Opportunity Zones Spur economic development?

Opportunity Zones drive economic development by providing attractive tax benefits to investors. The program offers two key advantages:

1. Tax Deferral on Prior Gains:

• Investors can defer taxes on previous gains when reinvested into a Qualified Opportunity Fund (QOF) until either of the below (whichever is earlier):
  • The date the QOF investment is sold or exchanged.
  • December 31, 2026.

2. Exclusions on Deferred Gains:

• Investments held for over 5 years qualify for a 10% exclusion of deferred gains. 
• Investments held for more than 7 years increase the exclusion to 15%. 
• For investments held 10 years or longer, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.

These tax benefits create powerful incentives for investors while driving long-term growth and revitalization in underserved areas.

Why Choose Mesquite for Your Opportunity Zone Investment? 

Mesquite offers investors access to Opportunity Zones near Dallas with distinct advantages:

• Prime Location: Positioned near major highways and 15 minutes from downtown Dallas, Mesquite combines convenience with growth potential.
• Established Infrastructure: Mesquite boasts robust transportation networks, industrial parks, and commercial hubs, making it an attractive site for development.
• Strong Workforce: Businesses benefit from access to a skilled and growing workforce in the greater Dallas-Fort Worth area.

Mesquite’s inclusion in Texas Opportunity Zones presents an unparalleled opportunity for investors seeking both financial returns and community impact.

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Contact our team to learn more about opportunity zones in Mesquite, available properties, incentives, and support for your business.

FAQ's & Application 

Summary

The Texas Enterprise Fund (TEF) awards “deal-closing” grants to companies considering a new project for which one Texas site is competing with other out-of-state sites. The fund serves as a financial incentive for those companies whose projects would contribute significant capital investment and new employment opportunities to the state’s economy.

Who Can Apply?

Companies planning a new project including a facility opening or expansion, with significant projected job creation and capital investment, where a single site in Texas is actively competing with at least one viable out-of-state option.

Type of Incentive

“Deal-closing” cash grants are calculated according to a uniform analytical model for each applicant. Award amounts are calculated on the average wage of new employees, taking into account the expected hiring timeline and number of jobs created, with per-employee award amounts subject to adjustment based on the company’s total proposed capital investment.

Eligibility Details

• The single Texas site being considered for the project must be in active competition with at least one out-of-state site and the company must not have made a location decision. Actions signifying the company has already made a location decision include, but are not limited to—signing a lease, purchasing land, hiring employees and/or making a location announcement.
• Projected new job creation must exceed 75 full-time jobs (urban areas) or 25 full-time jobs (rural areas).
• The total average wage for new jobs must meet or exceed the average county wage for the county in which the project would be located during the full term of the grant agreement.
• The company must demonstrate significant levels of planned capital investment, as determined by the Governor’s Office.
• The project must be supported by the city, county and/or school district in which the project would be located, particularly in the form of local economic incentive offers.
• The company must be well-established and financially sound.
• The company must operate in an advanced industry which affords it other feasible location options nationally and/or internationally.

If and when approved for a TEF grant and upon acceptance of such grant, all TEF awardees must sign a grant contract with the state which legally obligates the company to fulfill, among other things, projected job creation and average wage commitments. No TEF funds are disbursed until after grantees sign a grant contact and meet their respective job and wage targets for each individual period (typically annually). Grantees are required to maintain these job and wage figures throughout the term of the contract. In the event a grantee fails to do so or fails to meet other terms of the grant contract, certain contract provisions allow the Governor’s Office to demand repayment of previously disbursed grant funds in the form of clawbacks. Each TEF grantee will also participate in a press release with the Governor’s Office announcing the project and the TEF award amount.

Application

With a rolling application period, eligible companies must submit a complete application packet to be considered for a TEF grant.

TEF applicants undergo a thorough 11-step due diligence screening process. Areas of focus include project competitiveness, corporate activity, financial standing, tax status, legal issues, credit ratings, estimated economic impact, and the business climates of competing locations. The Governor, Lieutenant Governor, and Speaker of the House review all applications and must unanimously agree to support the use of TEF for each applicant.

More Details & Application

Summary

The Texas Enterprise Zone Program (EZP) is a state sales and use tax refund program designed to encourage private investment and job creation in economically distressed areas of the state.

How the Texas Enterprise Zone Program Helps Mesquite Businesses

Businesses considering Mesquite, Texas, for their operations can benefit significantly from the state's robust business incentives, like the Texas Enterprise Zone Program. This program offers a range of tax incentives designed to stimulate economic growth in designated areas.

For Mesquite businesses located within these zones, this translates to potential refunds on sales and use taxes paid for qualified expenditures, which can include everything from machinery and equipment used in production to building materials for renovations.

By reducing these tax obligations, the program helps businesses free up capital for crucial areas like research and development, employee training, or even expansion projects.   

Who Can Apply?

Texas communities must nominate companies in their jurisdiction to receive an Enterprise Zone designation and thus be eligible to receive state sales and use tax refunds on qualified expenditures by submitting an application on the company’s behalf. Companies must contribute information to the application packet where required. Companies must meet minimum capital investment thresholds and create and/or retain jobs that employ a certain percentage of economically disadvantaged individuals, enterprise zone residents, or veterans.

Type of Business Incentives

State sales and use tax refund, with the maximum allowable refund—both total and per-job—determined for each company which has been awarded a designation based on the company’s planned capital investment and job creation and/or retention at the qualified business site (see table below).

Companies approved for Texas Enterprise Zone Program designations are eligible to apply for refunds of the state sales and use tax they have paid during the designation period on qualified expenditures, up to their maximum allowable refund.

The Texas Comptroller’s Office administers all refunds. EZP designations are effective beginning 90 days prior to the deadline for the applicable application round and extend for a period of not less than 1 year and not more than 5 years from the date on which the designation is made.

Eligibility Details

For full eligibility details, see the EZP Statue, EZP Rules and/or EZP Overview links.

1.  Jobs counted for benefit must have an average weekly wage which meets or exceeds the average county weekly wage in the county which the qualified business site is located.
2.  Each community has a limited number of designations available per biennium; communities with a population at or above 250,000 have 9 designations available per biennium, while communities with a population of less than 250,000 have 6 designations available. The state may award a maximum of 105 designations statewide per biennium, and may award up to 12 designations per quarterly round.
3.  Employment (new and retained jobs) and capital investment commitments must be met prior to the expiration of the designation period.
4.  A company must first pay the applicable state sales and use tax on qualified expenditures in order to receive a refund of those taxes.
5.  The percentage of a project’s new employees who must meet economically disadvantaged, enterprise zone residency, or veteran requirement varies depending on whether the qualified business site is located inside or outside of an Enterprise Zone—state-designated area with economically depressed conditions.
   1. If located within a Zone, 25% of the company’s new employees at the qualified business site must meet economically disadvantaged, enterprise zone residency or veteran requirements
   2. If located outside a Zone, 35% of the company’s new employees at the qualified business site must meet economically disadvantaged, enterprise zone residency, or veteran requirements.
6. Only full-time jobs qualify for Texas Enterprise Zone Program award consideration
7. Jobs must be maintained through the end of the designation period, or for at least 3 years after the date on which tax benefits are received, whichever is later.

Application

The application period for the Texas Enterprise Zone Program occurs quarterly, with applications for the respective rounds due by 5:00 pm on the first business day of March, June, September and December.

Texas communities applying on behalf of a company must submit a complete application in paper form (via mail or in-person delivery) and non-refundable fee by the deadline for the EZP round for which they wish to be considered. Late applications will not be accepted.

More Details & Application

Summary

Industrial Revenue Bonds (IRBs) provide a source of tax-exempt or taxable bond finance for projects involving significant private activity that promote new and existing businesses, encourage employment, and expand the tax base of a community. IRBs are issued by Industrial Development Corporations sponsored by a government unit, but their proceeds are passed on to private businesses, which are generally responsible for debt service payment.

Who Can Apply?

Industrial Development Corporations (IDCs) or equivalent bodies whose creation by cities, counties or conservation and reclamation districts is authorized by the Development Corporation Act of 1979. IDC’s must issue IRBs on behalf of a city, county or conservation and reclamation district for the benefit of private companies for eligible projects within their jurisdiction. Another governmental unit outside of the IDC’s jurisdiction may request the IDC to issue bonds on its behalf.

Type of Incentive

Tax-exempt or taxable bonds issued on behalf of private companies for eligible projects, as defined in the Development Corporation Act of 1979. Generally, the bond debt service is paid by the private company under the terms of a lease, sale, or loan agreement. As such, the bonds do not constitute debts of or obligations of the sponsoring governmental unit, the IDC, or the State of Texas, except for Sales Tax Bonds.

There are 5 types of IRBs available:

1. Tax-Exempt Industrial Revenue Bonds for Manufacturing Projects: Issued to finance land and depreciable property for manufacturing facilities. An annual lottery is held for volume cap allocation.
   1. Maximum Issue Amount: $10,000,000
   2.  Maximum Project Capital Expenditure: $20,000,000
   3. Subject to State Volume Cap? Yes
2.  Exempt-Facility Bonds: Issued to finance certain facilities such as airports, dock and wharf facilities, mass commuting facilities, high-speed inter-city rail facilities, or certain qualified hazardous waste facilities. Facility must be governmentally owned, but may be leased or subject to management contracts with business.
   1. Maximum Issue Amount: No limit
   2. Maximum Project Capital Expenditure: No Limit
   3. Subject to State Volume Cap? Depends on facility type
3. Taxable Industrial Revenue Bonds
   1. Maximum Issue Amount: No limit
   2. Maximum Project Capital Expenditure: No limit
   3. Subject to State Volume Cap? No
4. Sales Tax Bonds: Bonds are available only to those cities which have adopted an economic development sales and use tax.
5. Empowerment Zone Bonds: Bonds are allowable only for projects located in federally designated empowerment zones or enterprise communities.

Eligibility Details

Please refer to the Development Corporation Act for definitions of eligible projects and eligible costs associated with those projects.

The issuance of bonds is governed by the state and federal law, and qualified bond counsel should be consulted on all potential IRB issuances.

Application

With a rolling application period, we recommend contacting the Texas Bond Review Board to determine whether the state has remaining funds available under its tax-exempt volume caps.

The process for issuing an IRB is generally as follows:

1.  Project applications are made directly to a local IDC or equivalent entity, who’s Board of Directors considers the project.
2.  If the project is deemed eligible according the Development Corporation Act, Chapter 501, Texas Local Government Code, a Declaration of Official Intent (tax-exempt only) is passed by the IDC or equivalent entity’s Board of Directors.
3.  If issuing tax-exempt bonds whose total statewide issuance is subject to a calendar year dollar cap, the IDC or equivalent entity submits an application to the Bond Review Board for review.
4.  Bond documents are negotiated among counsels for the business, the IDC or equivalent entity, and the bond purchaser.
5.  A public hears is held regarding the project.
6.  A bond resolution is passed by the IDC or equivalent body. The bond resolution authorizes the project and the principal amount of the bonds, and makes findings regarding the project as required by the state and federal law.
7.  After the IDC or equivalent body passes the bond resolution, the sponsoring governmental unit reviews the resolution and passes a unit resolution that among other things approves the IDC’s resolution
8.  Bond counsel prepares and submits an IRB application to the Office of the Attorney General and, if applicable, to the Governor’s Office.
9.  Upon approval by the Office the Attorney General and, if applicable, the Governor’s Office, the bonds are closed, issued and delivered.

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Summary

State sales and use tax exemptions are available to taxpayers who manufacture, fabricate or process tangible personal property for sale.

Texas sales and use tax exempts tangible personal property that becomes an ingredient or component of an item manufactured for sale, as well as taxable services performed on a manufactured product to make it more marketable. The exemption also applies to tangible personal property that makes a chemical or physical change in the product being manufactured and is necessary and essential in the manufacturing process. Some items, such as hand tools, are excluded from the exemption. A hammer, for example, is taxable even if it is used in fabricating a product for sale.

Manufacturing Exemptions

What is Tangible Personal Property?

Texas State Sales & Use Tax Information

Summary

The Product Development and Small Business Incubator Fund (PDSBI) offers long-term, asset-backed loans to product development companies and small business incubators/accelerators located in Texas. The loans finance the development and production of new or improved products or the stimulations of new or existing small businesses in Texas. The program targets those businesses which may be unable to obtain full financing or financing on workable terms in traditional capital markets.

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Summary

Established by the 74th Legislature in 1995, The Skills Development Fund was designed to better utilize the public community and technical college system in Texas as well as other training organizations and have them partner with businesses throughout the state (with priority on small businesses) to train workers to meet the labor needs of employers and the regional labor market.

Overview

The Skills Development Fund is Texas' premier job-training program providing local customized training opportunities for Texas businesses and workers to increase skill levels and wages of the Texas workforce. The Texas Workforce Commission administers funding for the program. Success is achieved through collaboration among businesses, public community and technical colleges, Workforce Development Boards and economic development partners.

More Information & Application

Summary

Intense and rapid response to, and support services for, employers expanding or relocating operations to Texas. These employers must provide complex or high-skilled employment opportunities.

Summary

Chapter 313 of the Texas Economic Development Act authorizes an agreement in which a taxpayer agrees to build or install property and create jobs in exchange for a 10-year limitation on the taxable property value for school district maintenance and operations tax. The City of Mesquite will facilitate the Chapter 313 process in partnership with a qualified project.

Tax Code Chapter 313 — Value Limitation And Tax Credits

Texas Economic Development Act

An appraised value limitation is an agreement in which a taxpayer agrees to build or install property and create jobs in exchange for:

• a 10-year limitation on the taxable property value for school district maintenance and operations tax (M&O) purposes.

The minimum limitation value varies by school district.

The application for a limitation on the appraised value for M&O purposes is submitted directly to the school district and requires an application fee that is established by each school district.

Tax credits applicable only to applications determined to be complete prior to 01/01/2014. To qualify for a tax credit, a separate application must be submitted to the school district after property taxes for the last complete year of the qualifying time period are paid. The credit is for the M&O taxes paid in excess of the limitation amount in each complete year of the qualifying time period.

The school district's tax collector must credit the overage in equal parts over the last seven years of the agreement, but the credit in each year may not exceed 50 percent of the total taxes paid on the qualified property during that year. Any eligible amount not credited during the seven-year period are to be credited over the following three years, but the amount credited in each year may not exceed the total taxes paid on the qualified property in that year.

Texas Comptroller Chapt. 313 Information

Agreement Docs

Municipality Agreements

Chapter 380 of the Local Government Code authorizes municipalities to offer incentives designed to promote economic development such as commercial and retail projects. Specifically, it provides for offering loans and grants of city funds or services at little or no cost to promote state and local economic development and to stimulate business and commercial activity.

In order to provide a grant or loan, a city must establish a program to implement the incentives. Before proceeding, cities must review their city charters or local policies that may restrict a city's ability provide a load or grant.

County Agreements

Chapter 381 of the Local Government Code allows counties to provide incentives encouraging developers to build in their jurisdictions. A county may administer and develop a program to make loans and grants of public money to promote state or local economic development and to stimulate, encourage and develop business location and commercial activity in the county.

The county also may develop and administer a program for entering into a tax abatement agreement. This tool allows counties to negotiate directly with developers and businesses.

Texas Comptroller 380 Details

Local Government Code, Chapter 380

Local Government Code, Chapter 381

Summary

To help further facilitate economic development, Dallas County provides strategic tax abatements, it participates in tax increment finance (TIF) districts, it nominates projects to the Texas enterprise project program, and it supports the formation of foreign trade zones. In addition, it, along with the Dallas County Hospital District, also offers the freeport tax exemption on goods that leave the State within 175 days.

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Summary

PACE is 100% financing for energy and water efficiency improvements to industrial, commercial, multi-family residential, and non-profit buildings. PACE is essentially a long-term (typically 10-20 year), low-cost loan for such improvements as:

HVAC modification or replacement
Light fixture modifications such as LED
Solar panels
High-efficiency windows or doors
Automated energy control systems
Insulation, caulking, weather-stripping or air sealing
Water use efficiency improvements
Energy- or water-efficient manufacturing processes and/or equipment
Solar hot water
Gray water reuse
Rainwater collection system

Clean Energy Tax Credits &  Opportunities in Mesquite, TX

Mesquite is quickly emerging as a top location for clean energy innovation, offering businesses and organizations the tools they need to implement sustainable solutions.

With a commitment to renewable energy and energy-efficient advancements, Mesquite not only fosters a greener future but also helps sustainability-focused businesses succeed with economic benefits.

Through clean energy tax credits & programs like the Property Assessed Clean Energy (PACE) initiative, businesses can access significant savings while making impactful upgrades to their properties.

Visit the Texas Pace Authority website to learn more about this clean energy tax program

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What is PACE Financing? The Texas 2 minute Answer

Summary

Tax Increment Financing (TIF) is defined as a public financing mechanism through which the incremental growth in taxes associated with new development or redevelopment can be captured and used to pay for maintenance and improvements within the district. The area in which TIF is being used is known as a Tax Increment Reinvestment Zone (TIRZ).

Overview

Tax increment financing (TIF) is an economic development tool used to promote investment in a defined area. The TIF has historically been used to finance public improvements in blighted or underdeveloped areas identified as reinvestment zones. If a municipality determines that development or redevelopment would not occur through private investment alone, within a reasonable timeframe, a reinvestment zone may be created after a public hearing process. The public hearing allows an opportunity for property owners to contest inclusion in the reinvestment zone. Once the zone is created, revenue from the TIF district is divided into two categories: property tax value prior to the formation of the TIF (tax base), and property tax value from new development or redevelopment and investment in the district (tax increment).

The difference of these two categories is deposited into a tax increment fund maintained by the city for investment in projects such as property acquisition, public right-of-way construction and repair, infrastructure development, demolition, site preparation, implementing and/or enhancing public utilities, streetscape improvements and beautification. Investment in these public improvements are important because they serve as a catalyst for private investment and development in the blighted area.

TIF zones generally last for 15 to 30 years. The governing body of the municipality determines through a public hearing process the length of time a TIF zone actually remains in place, and the zone boundary. At the end of the TIF district’s term, all the property tax revenue, meaning the base values plus increment, is redistributed to the participating tax entities.

Summary

Tax Code Section 11.251 was adopted as the enabling law. Freeport property includes various types of property that are detained in Texas for a short period of time (175 days or less) to be transported out of Texas. The goods must be in Texas for certain purposes, such as assembly, storage, manufacturing, processing or fabrication. This exemption was proposed to enhance economic development.

Sections 11.251, 11.437 and 11.253, Tax Code and Article 8, Sec. 1-j of the Texas Constitution

Section 11.251 of the Tax Code provides for a freeport exemption applying to goods, wares, ores and merchandise other than oil, gas and petroleum products (defined as liquid and gaseous materials immediately derived from refining petroleum or natural gas) and to aircraft or repair parts used by a certificated air carrier. The freeport goods qualify if they leave Texas within 175 days from the date they are brought into or acquired in the state.

However, for cotton stored in a warehouse to qualify for the freeport exemption, Section 11.437 provides that the warehouse operator may file a one-time application for the exemption. Property qualifies as freeport goods whether or not the person who transports it out of the state was the person who owned the property on Jan. 1. Taxing units may elect to tax the goods notwithstanding the above.

Section 11.253 provides an exemption for "goods in transit", described as goods acquired inside or outside the state, detained at a facility in which the owner of the goods has no direct or indirect ownership of the facility, detained for storing purposes by the person who acquired or imported the property, and then shipped to another location in or out of this state within 175 days. The goods do not include oil, gas or petroleum products or special inventories such as motor vehicles or boats in a dealer's retail inventory. Taxing units may elect to tax the goods notwithstanding the above.

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