Taxation

The State of Texas

The State of Texas is continually ranked at the top by corporate executives and site selection professionals for places to do business. This fact is due in large part, to the state's pro-business attitude, measures it has taken to promote manufacturing, and the limited state tax structure on commerce and its employees.

State Taxation on Business and Employees

The State of Texas does not have a corporate income tax or personal income tax. The State does however utilize four primary tax revenues to help fund state operations.

Sales and Use Tax - Texas levies a 6.25% tax on all retail sales, leases, and rentals of taxable items. Local taxing districts are allowed to supplement their operating revenues by imposition of up to an additional 2.0 percent tax for a maximum of 8.25%. An equivalent use tax is levied on storage, use, or consumption in Texas of taxable items that have been purchased outside Texas and upon which the Texas tax has not been paid. Sales and use tax is exempted in the following circumstances:

• Property that will be consumed in the manufacturing process
• Property that becomes a component of a manufactured product
• Property which will be sold for resale to the end customer
• Grocery food products and prescription medication

Note: Any return filed on time is given a discount of .5 of 1% of the tax due. An additional discount of 1.25% may be awarded to taxpayers who prepay monthly or quarterly taxes.

Motor Fuel - Consumers pay $0.20 per gallon upon the first sale, distribution, or use of gasoline and diesel fuel. Sales of liquefied gas and certain sales of diesel fuel are tax- free when the fuel is used for off-road purposes. Texas is a member of the multi-state International Fuel Tax Agreement (IFTA).

Motor Vehicle Sales and Use Tax - Texas levies a 6.25% tax on all retail sales of motor vehicles whether purchased within or outside the states boundaries. Vehicles rented for 30 days or less are subject to a 10 percent tax on the gross rental receipt. Motor vehicles rented or leased for 31 days or more are subject to 6.25% tax for the gross receipt or purchase price.

Local Taxes

The State of Texas constitution grants substantial decision making authority to local governmental entities: cities, counties, and public school districts. Local governmental entities have the authority to tax property and commercial trade in order to pay for services such as utilities, road maintenance and improvements, and public education. In Texas, local jurisdictions use two primary taxing mechanisms to pay for services - ad valorem (property) taxes and the sales and use tax.

Ad Valorem Taxes - Property Tax in the State of Texas is based upon 100 percent of market value on all tangible real and personal property as defined by federal and state statutes. The 2006 tax rate for property located within the corporate limits of Wichita Falls is 2.43364 per $100 of assessed value (see table).

Taxing Jurisdiction		Rate per $100 of Value
City of Wichita Falls		0.592460
Wichita Falls ISD		1.189000
Wichita County		0.447200
Total		$2.228660

Properties located outside the corporate limits of the City of Wichita Falls are taxed at the rate of 1.84118 per $100 of assessed value.

Sales and Use Tax - Local taxing jurisdictions (excluding school districts) can charge a maximum of $0.02 in addition to the State sales and use tax of $0.0625. As of an election held in 1997, citizens of the City of Wichita Falls voted to add an additional $0.10 to the existing $0.10 sales and use tax thus bringing the total to $0.0825 (state and local combined). This additional sales and use tax revenue is used by the City of Wichita Falls to reduce residential property taxes, for community development and quality of life initiatives, and to promote economic development activities that facilitate the creation of new jobs and increased tax base. (See Incentives)