The gross domestic product (GDP) of Texas is valued at $2.6 trillion, and the state government is introducing additional programs to help bolster the economy even more. Through the Jobs, Energy, Technology and Innovation (JETI) program, Texas aims to become the national leader in new jobs, technological innovation, and business growth. 

But, what exactly is the JETI Act and how does it work? And, what tax implications does it have?

At ITC Tax, we’ve helped companies take advantage and enjoy the benefits of the JETI program. Here’s what you need to know.  

What is the Jobs, Energy, Technology and Innovation (JETI) Act?

So, what is the JETI program in Texas? And, will it have a beneficial impact on your business?

The JETI Act was introduced to replace the Chapter 313 advantages that expired at the end of 2022. Simply put, the program aims to attract investors in sectors such as energy, high technology, and infrastructure through special abatements. 

JETI initiatives focus on starting and growing projects that have a lot of potential, but it’s important to note that this program only focuses on companies in certain industries. For instance, companies that work with renewable energy and energy storage solutions don’t qualify for this program. 

Goals of the JETI Act

Thanks to the JETI program, Texas companies have been able to take advantage of an economic booster since early 2024. The JETI Act has a few key objectives, including:

• Creation of New Roles/Jobs: The creation of new permanent roles and accompanying jobs in technical fields is one of the main goals of the JETI program. 
• Encouraging Large-Scale Investments: JETI is designed to create an environment that promotes business growth in order to attract local as well as out-of-state investors. 
• A Stronger Infrastructure: Because it encompasses key areas like energy and water systems, the JETI Act will also result in stronger state-wide infrastructure. 
• Becoming a Global Leader in Technology: Texas already boasts of cities like Austin, which are regarded as technology havens, but the JETI program aims to transform the state into one of the biggest tech hubs at a national as well as a global scale. 
• Achieving Energy Security: The JETI program pushes projects that contribute to energy independence, with a unique focus on dispatchable or distributable energy sources. 

How Does the JETI Act Work?

As with similar legislation, there are many moving parts of the JETI Act, but understanding how it works will help ensure that you get the most out of this program. 

The first thing you should know is that JETI provides relief in the form of property tax abatement. In other words, companies that apply and are cleared to leverage the program will receive tax breaks in exchange for the creation of new jobs. 

It’s worth noting that applicants have to get approval in order to take advantage of the program and the requirements are usually set by the location, industry, and other company variables. 

Lastly, it’s possible to get tax breaks for up to 10 years, whether you receive a full or partial reduction. There are certain projects that don’t qualify, namely, non-dispatchable energy sources. Dispatchable energy includes natural gas, hydroelectric, coal plants, and other sources that can be regulated to match the necessities of the grid. However, this also excludes facilities like solar panel farms.  

JETI Eligibility Explained

There are eligibility requirements you have to meet in order to take advantage of the Texas JETI program. Let’s take a closer look at them. 

NAICS Categorization

The North American Industry Classification System (NAICS) plays a key role in the Texas JETI program because it helps categorize industries. Only specific industries listed in the NAICS can apply for the program, and these are:

• Water infrastructure
• Utilities
• Natural sources development
• Energy and infrastructure
• Advanced manufacturing and technology
• Research, design, and development (R&D)

Additional Minimum Requirements

Besides organizational requirements, there are also certain provisional conditions that have to be met for companies to participate in the JETI program. These include:

• Population Threshold: There’s a budget range where counties with under 100,000 to more than 750,000 people can get anywhere between $20 million to over $200 million, depending on their situation. 
• Job Creation: Similarly to budget, companies are required to create new jobs according to their county population. Some companies may be required to generate as little as 10 jobs, while others have to create 75 or more. 
• Qualifying Zones: The Tax Code and Government Code of Texas both define reinvestment or enterprise zones, and organizations have to be located within these areas to participate in the JETI program. 
• Health Insurance: To participate in the program, every W-2 employee in your organization must have their health insurance covered, or at least receive a contribution towards this from your company. 
• Definition of Full-Time Employment: Every participating employee needs to register at least 1600 work hours per year to prove that the jobs created a both long-term and meaningful. 

What to Keep in Mind

In order to join the JETI program, Texas companies have to meet the requirements listed above, but these are not the only factors worth considering. Here are a few additional areas you may want to keep in mind before applying for the program. 

• The When: The review process can take months, so it’s important for your JETI agreement to be fully in place before you start expanding your business activities. 
• Performance Caveats: Failure to comply with the program can result in penalties and other actions, so it’s essential to stay committed. 
• Application Fee and Compliance: There is a non-refundable application fee of $30,000, so you need to have the right infrastructure in place for the investment to be worth it. 

Looking to Leverage the Texas JETI Act?

The JETI program in Texas was designed to create a more attractive, investment-oriented business environment that ultimately results in more high-paying jobs across different industries.

While eligibility criteria are set by your industry, it’s worth noting that the JETI Act is designed to bolster technical industries such as healthcare, technology, and engineering. 

As long as you meet the NAICS codes, fall within the designated investment zone, and meet other minimal requirements, you’ll be able to take advantage of this state-wide program. 

That said, to take advantage of the JETI program, Texas companies need to understand all of the implications and additional requirements. Ready to learn more? Contact ITC today to discuss the JETI Act and figure out the best approach for your company.