Incentive packages come loaded with terminology, from cash grants and tax abatements to TIF districts and PILOT agreements. This guide breaks down the key terms business leaders need to know to understand what’s being offered and speak the language of economic development with confidence.

Direct Financial Incentives

Cash Grants

Direct, non-repayable payments from a government entity to a company, tied to job creation and/or capital investment commitments. Often paid in tranches (portions of an incentive paid out in installments over time, usually tied to milestones) and subject to clawback if targets aren’t met.

Free Land

Land conveyed at no or nominal cost by a municipality or development authority, usually with clawback provisions.

Upfront Infrastructure Funding

Incentive dollars provided before or during construction, rather than as reimbursement, to ease project cash flow.

Tax-Based Incentives

Property Tax Abatements

A negotiated agreement that adjusts a company’s real and/or personal property tax liability for a set term, granted in exchange for investment and job commitments.

Tax Increment Financing (TIF)

A tool that captures the increased property tax revenue generated by new development and redirects it to reimburse infrastructure costs or fund related bonds.

Tax Increment Reinvesting Zone (TIRZ)

A designated geographic area, most used in Texas, where the increase in property tax revenue generated by new development (“the increment”) is captured and set aside to fund public improvements like infrastructure, within that zone, rather than flowing to the general tax rolls. It’s the Texas-specific term for what’s more broadly called TIF in other states.

Payment in Lieu of Taxes (PILOT)

A fixed or formula-based payment made instead of standard property taxes, providing long-term tax certainty, often used with bond-financed structures.

Sales Tax Exemptions and Rebates

A government provision that removes or refunds sales tax owed on qualifying construction materials, equipment, or utilities purchased for a project.

JETI

Texas’s school district value-limitation program for capital-intensive projects, limiting taxable value for M&O tax purposes in exchange for job and investment commitments.

Infrastructure & Site Development

Infrastructure Development

Public or public-private funding for roads, water, sewer, or utility extensions needed to serve a site.

Site Preparation Assistance

Public funding or in-kind work, such as grading or utility stub-outs, to bring a site to shovel-ready condition.

Workforce Incentives

Employee Training Support

Funding, often through a state workforce agency, for recruiting, screening, and customized job training.

Employee Training Funds

Dedicated grant pools earmarked for new-hire training, sometimes administered by a community college or workforce board.

Permitting & Fees

Permit Fees

Charges assessed by a municipality or county for reviewing and approving construction-related permits, such as building, electrical, plumbing, or grading permits, required before work can begin on a project.

Impact Fees

One-time charges assessed by a local government on new development to help fund the added burden that development places on public infrastructure and services, such as roads, water/sewer systems, schools, or parks.

Location-Based Programs

Enterprise Zone Benefits

A package of state incentives, such as tax credits, utility discounts, or permitting priority, available to projects in designated distressed or targeted area.

Environmental Sustainability Incentives

Credits, grants, or rate adjustments tied to green certifications, energy efficiency, renewable energy, or brownfield remediation.