Texas has provided generous state and local subsidies to projects ranging from manufacturing facilities in booming Austin and wind farms in central Texas to refineries on the coasts, financial companies, and data centers in the Dallas area. Texas Instruments, for example, will receive at least $2.36 billion for a semiconductor manufacturing plant deal approved in 2021. 

Texas has a regressive tax code that means low-wage earners pay a higher percentage of their income on taxes than high-wage earners. For example, Tesla and its billionaire CEO Elon Musk moved their residency to Texas to avoid paying income taxes. The state does not levy an income tax; instead, it has a tax on gross business receipts.  

At the state level, various subsidies exempt companies from paying taxes. Research and Development credits and exemptions cost the state over $500 million annually, and the Texas Enterprise Fund, a deal-closing fund, has provided grants ranging from $200,000 to $50 million. At the local level, subsidies are named after chapters in the state code. Chapter 380/381 rebates various city and county taxes to companies. The controversial Chapter 313 program, which allowed school districts to abate property taxes and make special side deals with companies, expired at the end of 2022. Many companies rushed to put in their applications before the program sunset, so those companies will benefit from the program for decades to come. The replacement program, Chapter 403, still provides substantial tax breaks to companies but eliminates the school side-deals, but is not eligible for legislative review until 2033.

Several agencies oversee Texas subsidies. The governor decides who gets money from the Texas Enterprise Fund, and the Texas Economic Development Office manages grants. The Texas Comptroller of Public Accounts administers tax-based subsidies. Chapter 313 and 403 deals are approved by local school boards and the comptroller’s office. City and county governments approve Chapter 380/381 deals. The Texas Economic Development Corporation (TxEDC), a private nonprofit, handles company recruitment for the state.

When it comes to transparency, Chapter 313 offered some of the best transparency in the country among subsidy programs and the disclosure might remain in place as long as the program is in use. It’s unclear yet if Chapter 403 will have the same high-level standards: the law that created the program loosened disclosure requirements, but the Comptroller Office could volunteer to impose the same standards as for Chapter 313. Chapter 380/381 deals are disclosed in a user-hostile database run by the state Comptroller Office. 

In 2022, Texas reported forgoing $1.23 billion in revenue to economic development tax abatement programs under GASB 77. This does not include the cost of forgone tax revenue due to the Chapter 313 program, which Tax Exemptions and Tax Incidence reports estimate to be at about $1 billion a year.  

Grants and tax subsidies are evaluated by the Economic Incentive Oversight Board, a body composed of citizens appointed by various public officials. The board, however, lacks professional support staff, there is no schedule for subsidy evaluation, and as-of right-subsidies are exempt from review.

Our database tracking corporate misconduct, Violation Tracker, scours 450 federal, state and local agencies in compiling resolved civil and criminal cases against companies. See the list of state agencies from which we collect information in Texas.

Last updated January 2024.

For more information, contact Jacob Whiton at [email protected].