Freeport Exemption Program

Purpose

The Freeport Amendment to the Texas Constitution allows local taxing authorities the option of exempting from ad valorem property taxes all business inventories acquired in or brought into Texas for fabrication, assembling, manufacturing, storage or processing and then exported outside the state within 175 days.

The County of Hidalgo, the City of Mission, South Texas College, and the public school systems (Mission CISD and Sharyland ISD) all allow the Freeport Exemption.

Eligible Projects

All Inventories are covered except oil, and gas and petroleum products. Cities, counties, school districts and junior colleges had to deny the exemption by April 01, 1990 or the exemption automatically becomes effective.

Application Process

Taxpayers from a county seeking the exemption must file an application with the County Appraisal District no later than April 30th of each year. The chief appraiser determines the value of the Freeport exemption in a current tax year according to the value of the "freeport goods" in inventory the previous year. This is done according to the following steps:

  • List the total cost of goods sold in the previous year
  • List the total cost of goods sold that were shipped out of Texas within 175 days of the date acquired or brought into Texas, less the cost of component goods not eligible for the exemption.
  • State upon what records these amount are based, i.e. audited financial statements, internal reports, Texas franchise tax reports, sales records, bills of lading, etc.
  • Divide line 2 by line 1.

The resulting percent is the amount of this year's inventory eligible for the Freeport Exemption.

The chief appraiser may require taxpayers to provide records to support the statements made in their application. If so, the record must be supplied within 30 days of the date of the request. Failure to do so forfeits the right to receive the exemption that year.

Contact:

Hidalgo County Appraisal District
Personal Property Division
4405 S. Professional Drive
Edinburg, Texas 78540
Tel: (956) 381-8466, ext. 161