Effective January 1, 2014, House Bill (HB) 800, passed by the Texas Legislature last year, created new tax incentives to attract research and development (R&D) activities to Texas.
HB 800 allows taxable entities a choice between a sales tax exemption for materials, software and equipment used for R&D purposes and a state franchise tax credit for qualified research activities. The incentives apply only to research and development activities and expenditures incurred within the State of Texas and there is an additional incentive for research conducted with Texas colleges and universities. As a member of the Texas A&M University System, the Texas A&M Transportation Institute (TTI) meets the definition of an institution of higher education and research conducted with TTI may qualify for these tax incentives.
For additional information about HB 800, please visit the State of Texas Comptroller’s website or contact a professional tax advisor.