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Navigating the Shifting Landscape of State Tax Incentives
Navigating the Shifting Landscape of State Tax Incentives: What Businesses Need to Know in 2025
As states continue to refine their tax codes to attract innovation and investment, businesses must stay ahead of the curve to make informed site selection decisions. Recent legislative changes in Texas and Minnesota underscore the importance of understanding how evolving tax incentives can impact your bottom line.
Texas: A New Era for R&D and Social Impact Incentives
Texas has overhauled its Research and Development (R&D) tax credit, effective January 1, 2026. The new structure offers a variable credit ranging from 4.361% to 10.903%, with a refundable option for businesses with no tax liability—an attractive feature for early-stage or high-growth companies.
Additionally, Texas introduced the Strong Families Tax Credit, allowing up to $1 million annually per entity for contributions to organizations supporting at-risk families. With a statewide cap of $5 million and a five-year carryforward, this credit not only supports corporate social responsibility goals but also offers meaningful tax relief.
Minnesota: R&D Refundability and Data Center Disruption
Minnesota’s omnibus tax legislation (HF 9) brings both opportunities and challenges:
- R&D Tax Credit: Now partially refundable, with rates of 19.2% in 2025 and 25% in 2026–2027, this change enhances cash flow for qualifying businesses conducting research in the state.
- Sales Tax Compliance: New remittance rules for vendors with liabilities over $250,000 will increase compliance complexity starting in 2027.
- Data Centers: The repeal of the electricity sales tax exemption (effective July 1, 2025) may significantly impact operational costs. However, HF 16 introduces a new framework for qualified large-scale data centers, offering long-term exemptions and incentives for sustainable, high-investment projects—albeit with new fees and regulatory hurdles.
Why Tax Incentives Matter for Site Selection
These updates highlight a critical truth: state and local tax incentives are no longer static—they are strategic tools that can make or break your site selection decision. Whether you’re expanding operations, relocating headquarters, or launching a new venture, understanding the nuances of these incentives is essential to maximizing ROI and minimizing risk.
Let’s Make Your Next Move the Right One
At Ashmore Consulting, we specialize in helping businesses navigate the complex world of state and local tax credits, incentives, and compliance. Our team of experts brings deep knowledge, real-time insights, and a proven track record of securing optimal outcomes for our clients.
Don’t leave money on the table. Let us help you turn tax policy into a strategic advantage.
Contact us today to schedule a complimentary consultation and discover how we can guide your next site selection with confidence and clarity.
The information contained herein is general in nature and is not intended and should not be construed as legal, accounting, or tax advice or opinion provided by Ashmore Consulting LLC to the reader. The reader is also cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact Ashmore Consulting LLC or another tax professional prior to taking any action based upon this information. Ashmore Consulting LLC assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.
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