Texas Boasts a Thriving Tech Sector
The Lone Star State is traditionally identified for being big in size, but did you know it’s also a major technology hub? In fact, Texas ranks only second to California in number of technology jobs in America. Aside from popular firms like Google, Apple, Dropbox and Oracle — which all recently constructed or extended major campuses in Austin — nearly two dozen California tech companies also repositioned to Texas or opened outposts there since 2014.
Historically, between 1997 and 2000 during the pinnacle of the dot-com boom, the Bay Area was a net importer of Texans. To be specific, about 1,500 more households moved into the Bay Area from Texas than vice versa – supplying a supplementary $191 million (2015 dollars) in taxable income into the region.
However, in the early 2000s the trend started to adjust, and Texas has been a net importer of Bay Area households ever since. From 2009 and 2012, as the recession was winding down and the second tech boom was accelerating, the region lost about 1,430 households to Texas, and nearly $390 million in taxable income.
Despite the fact that IRS data isn’t available beyond 2012, census statistics show that 24,600 more people moved from California to Texas in 2014 than the other way around. Notwithstanding a recent dip in energy-sector jobs, the state has three of the country’s five fastest-growing cities in 2014. Moreover, Austin — a landing hub for many Bay Area tech firms seeking to expand — grew more than any other big city in the United States, according to census data.
Ultimately, the move to Texas by companies from the Bay Area is supported by an infrastructure that nurtures education, research, and entrepreneurship. In addition, Texas companies, universities, and research institutions are national and global leaders in research and development in many industries, including electronics, medical, biotechnology, aerospace, advanced materials, and energy. The state also boasts a competitive State R&D Tax Credit, which can be used concurrently with the federal R&D Tax Credit.
Hence, for these technology companies that are involved with developing and researching innovative, new technologies, the credit scheme in Texas can add a layer of extra appeal. Fundamentally, investing in R&D is a way of spurring economic growth and taking advantage of the opportunities technology has made available.
If you want to learn more about R&D tax credits at both state and federal levels, contact a Swanson Reed specialist today for further information.