View events calendar

Sales Tax Economic Development Programs

Development Corporation Act of 1979

Article 5190.6, Vernon’s Texas Civil Statutes

For both 4A and 4B corporations, the Development Corporation Act requires cities to establish a corporation to administer the sales and use tax funds, and city voters must approve this special, dedicated tax at an election held for that purpose.

All cities located in a county with a population of less than 500,000 may impose the tax under 4A if the new combined local sales tax rate would not exceed 2 percent. Some cities located in counties with a population of 500,000 or more (Bexar, Dallas, El Paso, Harris, Hidalgo, Tarrant and Travis) may also use 4A for economic development efforts but a city’s eligibility varies from county to county.

For information on which cities are eligible in these counties, call your regional contact in the Comptroller’s Local Government Assistance Division.

4A sales tax can be used for manufacturing and industrial facilities; research and development facilities; recycling facilities; distribution centers; small warehouse facilities and distribution centers; military facilities; primary job training facilities; corporate headquarter facilities; job training classes; career centers; telephone call centers; business infrastructure; airport facilities (new as of 2007); and operation of commuter rail, light rail or commuter buses (new as of 2007).

All cities are eligible to adopt the 4B tax if the combined local sales tax rate would not exceed 2 percent. 4B sales tax can be used for the same purposes as listed for 4A. In addition, 4B can also fund retail business incentives (if city population is less than 20,000); sports and athletic facilities; entertainment, tourist and convention facilities; public parks and related open space improvements; affordable housing; and water supply and conservation programs (with special voter approval).

View further details about the Texas Economic Development Sales Tax.

County Assistance Districts

Chapter 387, Local Government Code

House Bill 1720, passed by the 2007 Legislature, expanded the provision making county assistance districts available to all Texas counties. Counties may adopt this sales tax to fund a variety of projects and programs. The commissioners court serves as the board of directors.

County assistance funds can be used for construction, maintenance or improvement of roads or highways; provision of law enforcement and detention services; maintenance or improvement of libraries, museums, parks or other recreational facilities; promotion of economic development and tourism; and provision of services that benefit the public welfare. The 2007 legislation expanded the acceptable use of funds to include the provision of firefighting and fire prevention services.

See additional information about the County Assistance District Sales Tax.

Enterprise Zones

Chapter 2303, Government Code

The Texas Enterprise Zone Program is an economic development tool for local communities to partner with the State of Texas to promote job creation and capital investment in economically distressed areas of the state. The Comptroller’s office administers Enterprise Zone refunds of state sales and use tax (Section 151.429, Tax Code).

See additional information on enterprise zones from the Governor’s Economic Development and Tourism Office or contact them at (512) 936-0100.

For information pertaining to Enterprise Zone refunds, contact the Comptroller’s Audit Headquarters toll free at (800) 531-5441, ext. 5-9902 or in Austin at (512) 305-9902.