Taxes & Incentives

The City of Round Rock can offer performance-based cash grants to qualifying companies through the Round Rock Transportation and Economic Development Corporation (Type B), which allows the City of Round Rock to fund economic development projects through a one-half cent sales tax collection.

Type B Corporations can fund industrial development projects such as targeted infrastructure, manufacturing, and research and development, and quality of life improvements, among other qualifying projects that create primary jobs. By definition, a primary job is a job that is available at a company for which a majority of the products and services are exported outside the local market, infusing new dollars into the local economy.

Eligible projects and award amounts depend on a number of factors including total job creation, capital investment, target industry and enhancement to Round Rock’s economic profile. The cash grants may be used at the company’s discretion.

Chapter 380 of the Local Government Code authorizes Texas municipalities to provide a grant or loan of city funds or services in order to promote economic development. For eligible companies, a local incentive agreement could be offered in the form of tax rebates for real or personal property, sales tax rebates and/or infrastructure improvements, and will be explored on a case-by-case basis.

A tax abatement is a local agreement between a taxpayer and a taxing unit that exempts all or part of the increase in the value of the real property and/or tangible personal property from taxation for a period not to exceed 10 years. Tax abatements are an economic development tool available to cities, counties and special districts to attract new industries and to encourage the retention and development of existing businesses through property tax exemptions or reductions.

Round Rock understands the importance of speed-to-market and can “fast track” its permitting process to deliver a substantially shorter timeline to bring a project online. Local officials are willing to customize a development timeline for industries requiring an aggressive schedule, and fee waivers may also be considered for high-priority projects.

Foreign Trade Zones (FTZ) are areas physically located in the U.S. but considered outside of U.S. Customs territory. A business using FTZs can reduce customs duties and fees and achieve logistics benefits for the import and export of goods. Round Rock has been preapproved by the federal government and is included in Foreign Trade Zone of Central Texas (No. 183).

Freeport property qualifies for an exemption from ad valorem taxation only if it has been detained in the state for 175 days or less for the purpose of assembly, storage, manufacturing, processing, or fabricating. Freeport property includes goods, wares, merchandise, ores and certain aircraft and aircraft parts. Round Rock offers companies a triple freeport exemption.

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 performance-based financial incentive for those companies whose projects would contribute significant capital investment and new employment opportunities to the state’s economy.

The discretionary cash grants are calculated according to a uniform analytical model for each applicant. Award amounts are calculated on the average wage of new employees, considering 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.

To qualify in Round Rock, projected new job creation must exceed 75 full-time jobs, demonstrate significant levels of planned capital investment, meet or exceed the average wage in Williamson County and must be in competition with at least one viable out-of-state option.

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.

Eligible 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.

Companies approved for Enterprise Zone 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.

Companies engaged in qualified research activities (as defined under federal tax law) in Texas may choose between accepting a sales tax exemption on tangible personal property directly used in qualified research or a franchise tax credit based on qualified research expenses.

The credit available is 5.0% of the difference between: (1) qualified research expenses incurred during the period on which the reporting period; and (2) 50% of the average amount of qualified research expenses incurred during the three tax periods preceding the period on which the report is based.

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.

In addition, Texas businesses are exempt from paying state sales and use tax on labor for constructing new facilities.

Texas provides 100% exemption on sales tax for computers, equipment, cooling systems, power infrastructure, electricity and fuel for data centers meeting the minimum thresholds of $200 million in capital investment, 20 new jobs and an average salary at least 120% of the county average salary.

The Economic Development & Diversification In-State Tuition for Employees is a program that allows employees—and those employees’ family members—of a qualified business considering a relocation or expansion of its operations in the State of Texas to pay in-state tuition rates at public institutions of higher education in the state without first establishing residency.

The Skills Development Fund (SDF) is Texas’ premier job training and upskilling program. SDF grants provide site-specific, customized training opportunities for Texas businesses and their employees to increase skill levels and wages of the Texas workforce.

Grants are awarded directly to a public community or technical college, the Texas Engineering Extension Service (TEEX), community-based organizations in partnership with one of these entities, or a local Workforce Development Board. Average training grants are approximately $2,000 per trainee and is administered by the Texas Workforce Commission.

Workforce Solutions Rural Capital Area (WSRCA) is a community partnership that provides no-cost recruitment and employment services to new and existing businesses and job seekers in Round Rock.

WSRCA maintains a team of dedicated Business Services Specialists to assist employers at every stage of their workforce needs including recruiting, interviewing and hiring, virtual or in-person job fairs, job postings, assistance with customized skill training, wage and labor market information, free space for conducting interviews and assistance with childcare and transportation for employees.

The Texas Industry Partnership (TIP) program supports collaborations between local workforce development boards and industry partners through the leveraging of matching contributions of cash or qualifying expenditures for occupational job training. Match funds must support certain WIOA activities and focus on eight designated industry clusters: Advanced Manufacturing; Aerospace, Aviation and Defense; Biotechnology and Life Sciences; Energy; Information Technology; Petroleum Refining and Chemical Products.

Apprenticeship is a combination of on-the-job training and related classroom instruction in which workers learn the practical and theoretical aspects of a highly-skilled occupation. Apprenticeship programs are sponsored by joint employer and labor groups, individual employers, or employer associations.

To train an apprentice, you and your employee must first complete an apprenticeship agreement which outlines responsibilities of the apprentice and employer. To qualify for funds, apprenticeship training programs and apprentices must be registered with the U.S. Department of Labor Office of Apprenticeship.

Through the Texas Workforce Commission (TWC) Skills for Small Business program, up to $2 million from the Skills Development Fund is dedicated to the backbone of Texas’ business community—our small employers. Small businesses can apply to TWC for training offered by their local community or technical college, or the Texas A&M Engineering Extension Service (TEEX). TWC processes the applications and works with the college to fund the specific courses selected by businesses for their employees.

This exceptional opportunity supports businesses with fewer than 100 employees and emphasizes training for new workers though it also may help upgrade the skills of incumbent workers.