Taxation & Incentives

Tax Information


Franchise Tax: The Texas franchise tax is a privilege tax imposed on each corporation and limited liability company chartered/organized in Texas or doing business in Texas. For franchise tax purposes, the term “corporation” also includes a bank, state limited banking association, savings and loan association, limited liability company, professional limited liability company, a corporation that elects to be an S corporation for federal income tax purposes, and a professional corporation.

Sales and Use Tax: The state levies a sales and use tax of 6.25% on sales of tangible personal property and certain services. The City of Liberty and Liberty County add an additional sales tax of 2.0% making the total combined rate of 8.25%. There are exemptions for groceries, medicine, property for resale, manufacturing equipment and many items used exclusively on farms and ranches for food production.

Sales TaxPercent
State6.25%
City1.00%
LCDC0.50%
County0.50%
Total8.25%

Property Tax: Texas has no state property tax. Local governments and special taxing districts levy taxes on real and tangible personal property. All property is appraised at full market value, and taxes are assessed by local county assessors on 100% of appraised value.

Propery Tax (per $100 of value)Number
City0.585100
County

0.578800

Hospital District0.090000
Navigation (S of US Hwy 90)0.013850
Liberty ISD1.394000
WCID #50.089900
Total Overlapping Tax Rate2.751650

Unemployment Tax: Businesses that employ one or more individuals may be subject to the state unemployment tax. New employers pay a tax rate of 2.7% of the first $9,000 of each employee’s annual compensation.

Hotel Occupancy Tax: A tax is imposed on a person who pays for a room or space in a hotel costing $15 or more each day. Local hotel taxes apply to sleeping rooms costing $2 or more each day. Tax revenue generated funds programs that promote tourism. Funds may be used for both advertising and operational expenditures, as long as the primary purpose of the event is to attract out-of-town visitors. Liberty has 3 hotels with 119 rooms for business and leisure visitors.

Hotel TaxPercent
State6.0%
City7.0%
Total13.0%

Local Incentives

Business Retention and Expansion Grants: Liberty Community Development Corporation provides grants which may be available for qualifying businesses in support of added infrastructure or capital investment in real property. These grants include, but are not limited to, business expansion grants, site improvement grants and utility and infrastructure improvement grants. The amount of the grant is subject to the company’s capital investment, jobs creation, payroll, the project’s economic impact on the community, or other measures of performance deemed necessary by the LCDC Board of Directors and City of Liberty. All grants are negotiated on a case-by-case basis.

Double Freeport Exemption: The City of Liberty and Liberty ISD grant Freeport Exemption, providing a substantial financial benefit to Liberty primary employers, which by definition, manufacturer or distribute products that are shipped outside of Texas. The Freeport Exemption exempts certain types of tangible personal property (inventory) from ad valorem (property) taxation provided the property is: 1) Acquired in or imported into Texas to be forwarded out of state, 2) Detained in Texas for assembling, storing, manufacturing, processing, or fabricating purposes by the person who acquired or imported it; and 3) transported out of the sate within 175 days after the date the person acquired or imported it into Texas.

Downtown Facade Improvement Grant: The Liberty Community Development Corporation (LCDC) operates a downtown facade improvement grant program. The program is available to any commercial business located in downtown Liberty, TX, which is defined as the area between MLK and Grand and between Milam and San Jacinto. The program provides for reimbursement of 50% of expenses up to a max of $20,000 related to improvements to a business’s façade. Eligible expenses include improvements to landscaping, porches, signage, windows, doors, awnings, lighting, painting, and other improvements. Interior renovations, payroll expenses, and equipment or machinery used in the business would not be eligible expenses under this program. 

Foreign Trade Zone: Liberty County FTZ #171, located in Liberty and surrounding counties, offers multiple, general purpose and sub-zone sites. Foreign and domestic merchandise generally considered to be in international commerce can be moved into a FTZ without U.S. Customs entry or payment of Customs duties or excise tax. If the final product is imported into the U.S., Customs duty and excise taxes are due when the final product leaves the FTZ and formally enters the U.S. No customs duty or excise tax is levied if the final product is exported from the U.S. 

Homebuilder Incentive Program: The Liberty City Council has approved a Homebuilder Incentive Program to encourage the development of owner-occupied single-family residential homes within the City of Liberty. The amount of incentives that a homebuilder can receive depends on the number of lots that are expected to be developed. However, incentives can include (1) waiver of tap fees, (2) waiver of permit fees, (3) reduced platting fees, (4) infrastructure assistance, or (5) any other incentive negotiated between the City and the homebuilder.

Hotel Occupancy Tax Rebates: Hotel and/or convention center projects that meet minimum investment thresholds may be eligible to receive Hotel Occupancy Tax rebates.

Property Tax Abatement: The City of Liberty has implemented a Tax Abatement Program under the provisions of Property Redevelopment and Tax Abatement Act found in Chapter 312 of the Texas Tax Code. The City of Liberty and Liberty County have established guidelines for the creation of reinvestment zones and granting tax abatements.

Utility Extensions: Liberty Community Development Corporation may participate in the cost to extend or upgrade certain utilities for projects that support new or expanded business development.

State Incentives

Corporate Franchise Tax Credits: Liberty County is designated a Strategic Investment Area (SIA). If your business is subject to a Franchise Tax and you are expanding or locating to the area, your business may be eligible to take advantage of various credits to reduce your franchise tax liability including tax credits for Research & Development, Jobs Creation, Capital, and more.

Sales & Use Tax Exemption on Manufacturing Equipment: Qualified manufacturing equipment and machinery will be 100% exempt from state and local sales tax paid on purchases of qualified machinery and equipment — must be used directly in the manufacturing, processing, fabrication, or repair of tangible personal property to be sold.

Skills Development Fund: 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.

Texas Capital Fund: The Texas Capital Fund program provides loans and grants to non-entitlement communities like Liberty, on behalf of businesses that hire 51% low-and-moderate-income persons. Businesses locating in Liberty County may be eligible to request that the City or County make an application on their behalf. Selection for Texas Capital Fund assistance is a competitive process. Program funds are awarded through the Texas Department of Agriculture.

Texas Enterprise Fund: The Texas Enterprise Fund can be used for a variety of economic development projects, including infrastructure development, community development, job training programs and business incentives. To be eligible for Texas Enterprise Fund support, a project must demonstrate a significant return on the state’s investment and strong long support. The review process will consider a variety of factors associated with each project, including job creation and wages, capital investment, the financial strength of the applicant, the applicant’s business history, analysis of the relevant business sector, and public and private sector financial support.

Other State Funding Programs: The State of Texas Attorney General office produces an annual Economic Development Handbook that provides detailed information about all available funding options offered in the State of Texas