Ad Valorem/Property Tax Exemptions

State Incentive

Ad Valorem or Property Tax Exemptions are sometimes known as Freeport Exemptions. A community may choose to offer the Freeport exemption for various types of goods that are detained in Texas for a short period of time. Freeport property includes goods, wares, merchandise, ores, and certain aircraft and aircraft parts. Freeport property qualifies for an exemption from ad valorem taxation only if it has been detained in the state for 175 days or less for the purpose of assembly, storage, manufacturing, processing, or fabricating. For certain aircraft parts, a community, by official action, may extend the deadline to 730 days.

Goods-in-Transit Incentive

House Bill 621 of the 80th Texas Legislature amends the Tax Code and the Government Code to add an
exemption from ad valorem taxation for goods-in-transit.

To qualify for the exemption, personal property used for assembling, storing, manufacturing, processing,
or fabricating purposes would have to be acquired in Texas or imported into Texas and stored at a Texas
location in which the owner of the goods does not have a direct or indirect ownership interest. The goodsin-transit would have to be transported to another location in Texas or out of state no later than 175 days
after the property was acquired in or imported into the state. Oil and gas and their immediate derivatives,
aircraft, and dealer's special inventories would not qualify for the exemption.

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