The Katy area and the great State of Texas have created dynamic and growing economies with the help of a pro-business tax structure and pro-business climate. Some key features of the tax and business environment include: no state income tax on persons or businesses, no local income or occupational taxes on persons or businesses, a low franchise tax, a strong tort reform law and Employment-At-Will and Right-to-Work laws.

Franchise Tax

The State of Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. Franchise tax rates, thresholds and deduction limits vary by report year. Use the rate that corresponds to the year for filing.

2020 and 2021



No Tax Due Threshold


Tax Rate (retail or wholesale)


Tax Rate (other than retail or wholesale)


Compensation Deduction Limit


EZ Computation Total Revenue Threshold

$20 million

EZ Computation Rate


Tax Rates, Thresholds and Deduction Limits for Prior Years

Ad Valorem (Property) Tax

Ad Valorem or property taxes are assessed at the local level on real and personal property for various taxing districts. Property is assessed per $100 valuation at 100% by County Appraisal Districts annually, unless otherwise noted. Numerous property tax exemptions are available for qualifying properties. Below are some property tax rates for various taxing entities.

Ad Valorem (Property) Tax Rates

Taxing District

Rate Per $100 of valuation ($) - 2020

Katy ISD


City of Katy


City of Fulshear


City of Houston


Cypress-Fairbanks ISD


Fort Bend County and Drainage District


Harris County


Waller County


Waller ISD



Sales and Use Tax

Sales and use tax rates for the City of Katy, City of Fulshear and City of Houston are one percent (1%). Special purpose districts such as Metro have a rate of one percent (1%). The State sales rate is 6.25%. The maximum total sales tax for any area in Texas is 8.25%. Numerous sales tax exemptions may be available for qualifying economic development projects.

Fuels Tax

The 2021 Texas Fuels Tax is $0.20 per gallon for gasoline and $0.20 on diesel. There is no local fuel tax.

Unemployment Insurance(UI)

Companies employing one or more employees may be required to pay state unemployment tax.  A minimum of six quarters is required to obtain an experience rating.  Starting rate in the State of Texas 2.7% and is based on the first $9,000 in earnings. 

Employer Contribution Rates (Estimated 2021)

Type Tax Rate
Average UI tax rate as a percent of taxable wages, Texas 1.91%
Average UI tax rate as a percent of taxable wages, U.S. 1.92%
Average UI tax rate as a percent of total wages, Texas 0.36%
Average UI tax rate as a percent of total wages, U.S. 0.46%

Source: U.S. ETA (Employee & Training Administration, 2021)

Workers Compensation Insurance

Options for Workers Compensation include self-insurance, the state operated Texas Workers Compensation Insurance Fund, or a licensed private insurance company.

Workers’ Compensation Program Costs per $100 of Covered Wages (Employer Cost)

Area Cost
Texas (2019) $.52
U.S. (2019) $1.17

Source:  National Academy of Social Insurance,  2020