Tax Structure

Tax Structure

Texas has one of lowest tax burdens in the U.S.

Texas - and particularly Harlingen has many benefits for prospective businesses. One major consideration for any employer is the cost of doing business and the State of Texas boasts great benefits for taxpayers.

According to www.TexasWideOpenForBusiness.com,

  • Texas has one of the lowest tax burdens in the U.S.
  • Texas has no personal or corporate income tax.
  • There is no state tax on property used for pollution control.
  • There is no state tax on goods in transit.
  • There is no state tax on machinery and equipment utilized in manufacturing.

State Taxes

Texas consistently ranks among one of the lowest per capita tax states in the nation.  Statistics show state and local taxes consume a smaller proportion of Texans' incomes (9.4%) than the national average (10.6%)

State Corporate and Personal Income Tax

Texas does not have a state personal income tax! Because Texas doesn't have an income tax, Texas residents are able to deduct their sales taxes on their federal tax return.

Texas Franchise Tax

Corporations, limited liability companies, partnerships, professional associations, joint ventures and other legal entities are subject to the Texas Franchise Tax. Sole proprietorships and general partnerships (owned by "natural persons") are not subject to the Franchise Tax.

Rate
The Franchise Tax rate for most taxpayers is 1.0 percent of the Tax Base (Margin) described below. For entities primarily engaged in retail trade (Division G of the 1987 SIC Manual) or wholesale trade (Division F of the 1987 SIC Manual), the rate is 0.05 percent. The E-Z filing rate is 0.0575 percent.

Tax Base (Margin)
The Tax Base (Margin) will be the lowest of the three options below, times the apportionment factor:

  • 70 percent of total revenue
  • Total revenue minus Cost of Goods Sold
  • Total revenue minus Compensation

Apportionment of Tax Base (Margin)
The amount of revenue attributable to Texas for Franchise Tax purposes is determined by dividing the Texas gross receipts by the total gross receipts of the firm.

Credits
Firms that were subject to Franchise Tax on May 1, 2006 may claim the following credits:

  • Installments or carryover from Economic Development Credits
  • Carryover of Business Loss Credits

Reporting
The initial report is due 1 year and 89 days after commencement of operations; thereafter annual reports are due on May 15. The annual report will cover the accounting year ending in the calendar year prior to the report year.

No tax is due for entities with total revenue of $434,782 or less or entities that calculate a tax liability of less than $1,000. All taxable entities are required to file a report, regardless of the amount of tax owed.

Taxable entities with total revenue of less than $10 million may elect to pay the franchise tax using the E-Z computation method (total revenue x apportionment factor x 0.575 percent).

Combined reporting is required for "affiliated groups" in which:

  • 50 percent interest is owned by a common owner or owners
  • Members of the group are engaged in a unitary business.

 

Local Taxes

Real and personal property is taxed based on actual value (less depreciation in the case of personal property). Taxes are due on January 31 and are based on the mill levy established each year by the taxing jurisdictions and will be applied for each $100 of appraised value.

The Cameron County Appraisal District is responsible for evaluating property values within Cameron County. It is also responsible for any appeals on property appraisals.  The following are the rates for 2016.  For verification or further information, please visit www.cameroncad.org

Inside City Limits
Taxing Entity Tax Rate
CITY OF HARLINGEN 0.588827
CAMERON COUNTY 0.407743
HARLINGEN C.I.S.D 1.318000
PORT OF HARLINGEN 0.000000
SOUTH TEXAS I.S.D 0.049200
Outside City Limits
Taxing Entity Tax Rate
CITY OF HARLINGEN 0.588827
CAMERON COUNTY 0.407743
HARLINGEN C.I.S.D 1.318000
PORT OF HARLINGEN 0.000000
SOUTH TEXAS I.S.D 0.049200
C.C. Regional Mobility Authority – TIRZ #1 A 0.000000

The latest tax rates and further information can be found on the Cameron County Appraisal District website.