Property Taxes

Although there is no state property or unitary tax in Texas, there are local property taxes levied by counties, municipalities, independent school districts (ISD), and special districts. These political subdivisions may impose ad valorem taxes on real and personal property.

The total tax rate for a particular location is calculated by combining the applicable tax rates for each taxing entity that has jurisdiction over the area. Rates are assessed at 100% of the market value.

2007 Property Tax Rates
Per $100 Assessed Valuation

Sales Tax

The State of Texas applies a sales tax rate of 6.25% to the sale of tangible personal property and taxable services, with exemptions for items such as grocery food, utilities, raw materials and manufacturing equipment.

In conjunction with the state sales tax, municipalities in Texas may levy a sales tax. The City of League City applies a sales tax of 1.75% for a total sales tax amount of 8%.

Corporate Franchise Tax

In 2008, Texas will replace its franchise tax with a tax based on the taxable entity’s “margin”. The tax applies to corporations, limited liability companies, partnerships (general, limited and limited liability), business trusts, professional associations, business associations, joint ventures and other legal entities organized in Texas or that do business in Texas. The tax is not imposed on sole proprietorships, general partnerships directly owned by natural persons, and other specified entities such as certain financial services businesses, nonprofits, and others.

Based on calculation formulas and discounts, taxable entities with revenues of $434,782 or less will owe no tax. Taxable entities who calculate their tax due to be less that $1,000 will owe no tax. However, all taxable entities, including those who will owe no tax, must file a return.

The tax rate is 1% of margin for most taxable entities. The tax rate is 0.5% for entities primarily engaged in retail and wholesale trades as well as those businesses classified as eating and drinking establishments.

For additional information, contact the Office of the Texas Comptroller of Public Accounts at (512) 463-4000, or www.window.state.tx.us.

Hotel/Motel Occupancy Tax

In Texas, hotel room rates are taxed at 6%. The City of League City applies an additional 6% for a total hotel occupancy tax of 12%.

Businesses eligible for incentives include manufacturers, distributors, corporate offices or service centers, research and development facilities, and regional tourist related facilities. Some larger regional retail business development projects may be eligible for certain types of incentives. An application for incentives is available upon request.

Abatement of Property Taxes

The City of League City may grant up to 100% abatement of property taxes on buildings, fixed machinery and business personal property for up to ten years. Minimum qualifications for tax abatement are $1 million in real property improvements and 15 new jobs created. Up to 50% tax abatement may be granted for eligible projects with $500,000 to $1 million in improvements and 7 jobs created.

Galveston County may join the City of League City on projects that meet the county’s eligibility requirements. Certain manufacturing or research and development corporations may qualify for reduction in school district property taxes under the Texas Economic Development Act. This incentive program was created in order to provide companies making a substantial capital investment to receive tax credits from participating local school districts.

Freeport Property Tax Exemption

The Freeport exemption exempts taxes on eligible inventory that is transported out of the state of Texas within 175 days of acquisition. Inventory property may first be assembled, stored, manufactured, processed or fabricated locally.

Empowerment Zone

Qualified businesses locating in League City’s Empowerment Zone may be eligible for assistance in extending water and sewer lines, paving public streets or the cost of municipal fees. The zone is located along the East side of State Highway 3, between Walker Street and the city limits.

Municipal Grants

The City of League City may provide loans and grants of city funds as well as city employees and equipment to promote economic development projects within the city. Eligible projects may receive sales tax grants, franchise fee grants or utility line extensions.

Skills Development Fund Program

The State of Texas provides grants to businesses for training programs carried out through community and technical colleges.

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. These funds are used primarily to attract new business to the State of Texas or to assist with the substantial expansion of an existing business as part of a competitive recruitment situation. For application information, contact the Office of the Governor, Economic Development Tourism at (512) 936-0101 or www.governor.state.tx.us/divisions/ecodev/ed.bank/tefund to download an application.