The Jobs, Energy, Technology, and Innovation Act (JETI), introduced in Texas in 2024, offers property tax incentives aimed at fostering economic growth and supporting technological advancements, especially in designated Qualified Opportunity Zones. The JETI program is intended to attract significant business investments to Texas, positioning the state as a competitive destination for technology and energy industries. While offering substantial tax benefits, JETI sets specific requirements for timing, performance, compliance, and disclosure, particularly for projects located in Qualified Opportunity Zones.

Program Benefits

Business Incentives in Qualified Opportunity Zones

Businesses meeting JETI qualifications can access property tax reductions through appraised value limitations, primarily impacting school district maintenance and operations (M&O) taxes—the most significant component of Texas property taxes. Eligible companies located within Qualified Opportunity Zones can receive a 10-year, 50% limitation on the taxable value of qualifying property. There is an enhanced benefit for projects situated entirely within federally designated Qualified Opportunity Zones: a 75% reduction in M&O liability through a 25% appraised value limitation.

Local Economic Impact in Qualified Opportunity Zones

The JETI program is structured to drive local economic development through job creation and infrastructure expansion. The program’s requirements for job creation quotas and wage minimums support high-wage jobs, boosting demand for local suppliers, contractors, and services. This further stimulates economic activity in Qualified Opportunity Zones.

Eligibility Requirements

JETI targets industries that align with Texas’ economic growth priorities, emphasizing high-wage job creation and significant capital investment.

NAICS Industry Codes

JETI eligibility applies to select industries classified under the North American Industry Classification System (NAICS) codes, including:

  • Manufacturing (NAICS 31-33): Particularly for high-tech equipment and technology production projects.
  • Utility Services (NAICS 2211): Supporting the state’s dispatchable energy needs.
  • Natural Resources (NAICS 11 and 21): Involving agriculture, mining, oil, and gas.
  • R&D (NAICS 5417): Promoting technological and scientific innovation.
  • Critical Infrastructure: Including water, sewage, petroleum, and pipeline facilities.

Renewable energy and energy storage projects are not eligible under JETI.

Minimum Commitments

Applicants must meet capital investment and job creation criteria, which vary by county population. New jobs created must meet specific requirements:

  • Wages above 110% of the county average for the industry.
  • At least 1,600 work hours annually linked to the eligible project.
  • Health benefits provided to employees.

For projects spanning multiple counties, the commitments align with those of the county with the smallest population, encouraging uniform standards across Qualified Opportunity Zones.

Key Compliance Considerations for Qualified Opportunity Zones

1. Timing

For projects in Qualified Opportunity Zones, a JETI incentive agreement must be finalized before construction begins, as the review process can take several months.

2. Performance Bond or Guarantee

Non-compliance may result in penalties, interest, and potential recapture of tax benefits. Applicants must secure a performance bond from a third-party surety or a parent company guarantee set at 10% of the anticipated tax benefit.

3. Application Fee

A non-refundable $30,000 application fee is required for all applications.

4. Compliance Reporting

Approved businesses must submit reports every two years detailing data on job creation, salary levels, and economic impact.

5. Transparency and Public Involvement

JETI ensures transparency by publicly disclosing details such as company names, incentive types, and expected economic impacts, with a particular emphasis on Qualified Opportunity Zones. Application decisions are published, and community hearings allow stakeholders to engage in the decision process.

The JETI program offers valuable property tax incentives for businesses planning expansion, with added benefits for projects located within Qualified Opportunity Zones. The JETI program is intricate and detailed, yet it offers valuable incentives that make it worthwhile. KE Andrews’ Credits and Incentives tax experts are knowledgeable about the program and can assist organizations considering a project with their application to the program.