Tax Incentives

Defense Economic Readjustment Zone Program

The Defense Economic Readjustment Zone Program (DERZ) was established to stimulate business recruitment and job creation in adversely impacted defense-dependent communities. DERZ can provide assistance to Texas communities, businesses, and workers impacted by, or vulnerable to, the closure or realignment of military installations and the reduction of federal defense contracting expenditures.

Benefit

Designated readjustment projects are eligible to apply for a state sales and use tax refund on qualified expenditures. The level and amount of the refund is related to the sales and use tax on qualifying expenditures and the number of jobs created/retained at the site.
The number of jobs eligible for a refund will not exceed 500 or a number equal to 110% of the anticipated new permanent/retained jobs.
The maximum refund per allocated job is $2,500.
Local communities may also offer benefits to participants under the DERZ program. These may include tax abatement, tax increment financing, and one-stop permitting.

Eligibility

A community must nominate a zone area, receive designation as a Defense Economic Readjustment Zone, and provide specific information as required by statute.
A company must receive nomination for a project from their local community.
DERZs are designated for a period of seven years with no limitation on the number of zones.
A DERZ may have no more than two defense readjustment projects.
DERZ projects may be designated for up to a five year period, in addition to a 90 day window prior to the designation date. Employment and community commitments must be met within this timeframe.
At least 25% of the qualified business' new employees in the DERZ must be residents of the governing jurisdiction, economically disadvantaged, or dislocated defense workers.