The Texas Chapter 313 tax incentive program, formally the Texas Economic Development Act, let school districts cap the taxable value of large industrial projects for maintenance and operations (M&O) property tax purposes, saving qualifying companies millions over a ten-year limitation period. The program expired on December 31, 2022, and no new applications have been accepted since.1Texas Comptroller of Public Accounts. Texas Economic Development Act Chapter 313 Summary Data 2025 Agreements signed before that date remain in effect for their full terms, so some Chapter 313 deals will keep running into the 2030s. The legislature replaced it with the Jobs, Energy, Technology, and Innovation Act (JETI) under Tax Code Chapter 403, which uses a different structure.
How the Tax Break Worked
School district property taxes split into two parts. The M&O portion funds daily operations, and the interest and sinking (I&S) portion pays off bond debt. A Chapter 313 agreement only reduced the M&O side. The business still owed I&S taxes on the full market value of its property, so the district kept collecting enough to cover its bond obligations.
The core benefit was a cap on the appraised value used to calculate M&O taxes. A company might invest $500 million in a new facility and pay M&O taxes as though the property were worth only $30 million. That cap held for ten years no matter how much the property actually appreciated. Limitation amounts ran from $10 million to $100 million depending on the school district’s classification and the applicable subchapter.2Texas Comptroller of Public Accounts. Tax Code Archive for Chapter 313, Texas Economic Development Act
Before the limitation period began, companies went through a qualifying period, typically two years, during which they built the project and placed it in service. The full timeline, counting the qualifying period, the ten years of limitation, and additional years of supplemental obligations, could stretch to roughly 15 years.
The valuation cap cut M&O revenue flowing to the school district, but districts rarely absorbed the loss outright. Companies routinely negotiated supplemental payments back to the district, often a significant share of their tax savings, and separate revenue protection payments covered shortfalls tied to state school-finance formulas. After those payments, the net discount to the company was considerably smaller than the headline M&O reduction suggested, which is a major reason districts signed on.
Who Could Qualify
Eligibility was narrow. Projects had to fall into specific industrial categories: manufacturing, research and development, renewable energy generation (large wind and solar farms were frequent users), clean coal, and data centers requiring substantial infrastructure. Retail stores, warehouses, and residential developments did not qualify.
Under Section 313.021, “qualified property” meant land on which a new building or improvement was constructed after the application date, the new building or improvement itself, and tangible personal property first placed in service in that new facility.3Office of the Attorney General of Texas. Attorney General of Texas Opinion No. GA-0665 Existing facilities that were simply purchased or repurposed did not count. The property had to be new and directly necessary for the qualifying operation.
The state sorted school districts into five categories based on property wealth, Category I being wealthiest. Minimum capital investment scaled accordingly:
- Category I: $100 million
- Category II: $80 million
- Category III: $60 million
- Category IV: $40 million
- Category V: $20 million
These thresholds applied to “qualified investment,” meaning tangible personal property first placed in service as part of the project.2Texas Comptroller of Public Accounts. Tax Code Archive for Chapter 313, Texas Economic Development Act
On the employment side, companies had to create at least 25 qualifying jobs in non-rural districts or 10 in rural ones. School board trustees could waive that requirement if they found the count exceeded what the industry reasonably needed to operate the facility.4State of Texas. Texas Tax Code 313.025 – Application More than half of applicants historically received such waivers, so the job numbers often functioned as a floor that could be adjusted downward. Qualifying jobs had to pay at least 110% of the average weekly manufacturing wage in the county, and companies had to provide health insurance to all qualifying employees.
Compliance and Recapture
Signing the agreement did not end the obligations. Companies filed annual Job Creation Compliance Reports with the Comptroller each April, including payroll records and documentation for every qualifying position. Missing reports or missing job-verification documents produced adverse compliance determinations. Biennial progress reports went to the school district by June 15 of each even-numbered year, and the district uploaded them to the Comptroller by August 15.5Texas Comptroller of Public Accounts. Chapter 313 Forms
If a company fell out of compliance on investment, job, or wage terms, the school district could terminate the agreement. Termination did more than stop the break going forward. The company faced recapture of taxes it had avoided during the limitation period, turning the entire discount into a deferred liability. That is where Chapter 313 deals occasionally went wrong for companies that overestimated long-term staffing or underestimated the reporting burden.
What Replaced Chapter 313
The 88th Legislature passed House Bill 5, creating the Jobs, Energy, Technology, and Innovation Act (JETI) under Tax Code Chapter 403. Like Chapter 313, JETI offers a ten-year M&O appraised value limitation, but the mechanics are different.6Texas Comptroller of Public Accounts. Jobs, Energy, Technology and Innovation Act (JETI)
Rather than district-specific valuation caps, JETI applies a flat 50% abatement on the appraised value for M&O purposes, or 75% for projects located entirely within a qualified opportunity zone.6Texas Comptroller of Public Accounts. Jobs, Energy, Technology and Innovation Act (JETI) The negotiated supplemental payments to school districts are gone. Districts now receive a $30,000 application fee and nothing more.
Job and investment thresholds scale with county population instead of school district wealth:
- County population 750,000 or more: 75 jobs and $200 million investment
- County population 250,000 to 749,999: 50 jobs and $100 million investment
- County population 100,000 to 249,999: 35 jobs and $50 million investment
- County population under 100,000: 10 jobs and $20 million investment
Dispatchable electric generation facilities are exempt from the job requirements entirely.6Texas Comptroller of Public Accounts. Jobs, Energy, Technology and Innovation Act (JETI) JETI agreements also require Governor’s office approval on top of Comptroller and school district sign-off, adding a third layer of review. Applicants must show through a “compelling factor determination” that the investment would not happen in Texas without the incentive, with evidence of alternative sites the company considered. Companies must post a performance bond before the agreement is executed.