The Katy area and the state of Texas have created dynamic and growing economies using a pro-business tax structure that contributes to the business-friendly climate.
Key features of the tax and business structure include:
- No state income tax on persons or businesses
- No local income or occupational taxes on persons or businesses
- Low 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. Current rates can be found here.
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 percent by County Appraisal Districts annually, unless otherwise noted. Numerous property tax exemptions are available for qualifying properties. Check your town and county for rates.
Sales and Use Tax
Sales and use tax rates for the City of Katy, City of Fulshear, and City of Houston are one percent. Special purpose districts such as Metro have a rate of one percent. The state sales rate is 6.25 percent. The maximum total sales tax for any area in Texas is 8.25 percent. Numerous sales tax exemptions may be available for qualifying economic development projects; contact Katy Area EDC for assistance.
Motor Fuel Taxes and Fees
Please check the Texas State Comptroller’s website for various categories of taxes and fees. There is no local fuel tax.
Companies employing one or more employees may be required to pay state unemployment tax. An employer’s tax rate determines how much the employer pays in state Unemployment Insurance taxes. To calculate the amount of unemployment insurance tax payable, the Texas Work Commission (TWC) multiplies the amount of taxable wages by the employer’s tax rate. The maximum amount of taxable wages per employee per calendar year is set by statute and is currently $9,000. A minimum of six quarters is required to obtain an experience rating. The TWC has more information.
Workers Compensation Insurance
Options for Workers Compensation include self-insurance, the state-operated Texas Workers’ Compensation Insurance Fund, or a licensed private insurance company.