It can be tricky to move goods from one state to another as far as businesses are concerned. In Texas, companies are always worried about where they should store their inventory. But thanks to Freeport Exemption, there’s now a way to exempt goods from property taxes.

This article discusses what Freeport Exemption is all about. Find out how late application can affect your goods and transportation.

Get the tax exemption that your goods need, and steer clear of any penalty fees. We’ll help you be familiar with tax exemption eligibility.

For a smoother business flow in and out of Texas, take notes and continue reading below.

What Is Freeport Exemption, and How Does It Affect Businesses inTexas?

Freeport Exemption is the business personal property tax exemption imposed on inventory. This affects the inventory that is in Texas for 175 days or less and will be moved outside the state.

There was a constitutional amendment in 1989 to exempt Freeport goods. It was to help exempt goods from inclusion in business property taxes.

The entire exemption is to help attract more businesses in Texas. Once a company qualifies for Freeport Exemption, they are eligible for a tax break.

How to Qualify for the Freeport Exemption in Business

The goods in the state need transportation out of Texas within 175 days. This begins from the date of the delivery of goods, the manufacturing, to when the goods are brought into the state.

The exemption comprises an inventory like finished goods, raw materials, work in process, and supplies. You’ll find exceptions with the type of goods, such as liquids. These liquids can be in the form of natural gas, oil, or gaseous materials.

The Importance of Meeting Requirements on Time

For a business to qualify for the Freeport Exemption, you have to file an annual application. You have to prepare your county’s appraisal district beforehand and provide documentation.

Documentations needed for timely submission:

  • Inventory reports
  • Sales reports
  • Financial statements

Your documents need proper documentation as this is important. The tax dollars deducted from Freeport Exemption depend on the percentage of goods. This year’s tax exemption comes from last year’s percentage.

Rules on Late Filing for Freeport Exemption

Texas has updated its new filing deadlines. For late filing of Freeport Exemption, it will be due on April 30 and before May 1. The late and final deadline plus penalty is now on June 15.

Penalty for late filing will still be 10% of the difference between the taxes. The exemption is included, except when a specific amount is imposed.

If you are already familiar with the late filing dates for Freeport Exemption, then this will be good news. They are slight changes that you can keep up with as long as you get the Freeport Exemption.

When in doubt, you can always ask the opinions of experts. Try to talk to business owners who have experienced filing late Freeport Exemption applications before. They can give you sound advice on what steps to take for your application.

What You Need to Know about the Jurisdictions on Freeport Exemption

Not all jurisdictions can grant Freeport Exemption for your business. Cities and school districts have their separate taxing units. They will have to approve each addition of Freeport Exemption.

You need to consider that not all jurisdictions where your property is can grant you one. One thing you can do is to go under county appraisal. The best possible result you can have is Triple Freeport. This allows you Freeport Exemption from your location and within the jurisdiction.

Not Yet Sure If You Can Still File for Freeport Exemption Application?

The best option is to contact property tax consultants. They will give you the details you need on what to file and when to file. It is important to prepare your documents on time. Have them ready and reviewed beforehand.


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