Tax Credits for State Institutions of Higher Education

House Bill 4044, enacted during the 89^th Texas legislative session in 2025, eliminates the depreciation and non-tax-exempt use provisions in the Texas Historic Preservation Tax Credit (THPTC) program for state university systems and other state institutions of higher education. This will allow these entities to take advantage of the state tax credit to assist in financing capital projects or maintenance work on their historic buildings for a period between January 1, 2026 and January 1, 2035. 

The program provides for a tax credit against Texas franchise or insurance premium taxes, equal to 25% of qualified costs expended on the rehabilitation of a historic building. Like non-profits, which are also eligible to participate in the THPTC program, state colleges and universities can sell the credits they earn to private companies that owe franchise taxes or insurance premium taxes to the Texas Comptroller of Public Accounts. 

Eligible schools or institutions are those that meet the definition of an institution of higher education or university system as defined by Section 61.003 of the Texas Education Code. This generally includes public junior colleges, public technical institutes, public senior colleges or universities, medical and dental schools, and other facilities within the public university systems described in the Education Code. The new law applies only to state-owned universities and institutions of higher learning. Private non-profit and for-profit schools are already eligible to participate in the tax credit program under the pre-existing rules. 

Higher Education projects must follow the same rules and meet the same requirements as all other projects participating in the THPTC program. 

Basic program requirements are as follows: 

• Buildings must be designated as historic, or determined eligible to pursue historic designation. This includes listing in the National Register of Historic Places, or designation as a Recorded Texas Historic Landmark or State Antiquities Landmark. 
• Buildings that are not already designated must be determined eligible for designation as the first part of the application process, and then MUST pursue and receive historic designation. The designation process must be completed before the THC can certify a completed rehabilitation project to receive tax credits. THC typically recommends that undesignated properties pursue listing in the National Register of Historic Places, which can take approximately a year to complete.
• Architectural work must meet the Secretary of the Interior’s Standards for Rehabilitation and will be reviewed by the tax credit staff within the THC’s Division of Architecture. Work that does not meet the Standards for Rehabilitation may require revision in order for the project to be certified. 
• It is strongly recommended that all proposed work to be submitted for review and approval before construction begins, although that is not a requirement of the program. However, any completed work that is considered inappropriate could lead to a denial of tax credits. We encourage potential applicants with in-progress projects to contact our office as soon as possible.
• There is a three-step application process. Part A establishes that your building is historic. Part B details your proposed plans. Part C documents the completed project. Applications are available to download from our Submit an Application page. 
• Part A must be submitted to the THC before the project is completed, otherwise the project is ineligible to receive tax credits. Tax credits can be claimed through the Comptroller’s office only once Part C has been certified by the THC. 

The law was signed on June 20, 2025, and goes into effect on January 1, 2026, with an expiration date of January 1, 2035. Only qualified expenses incurred by the property owner or long-term lessee within this time period count towards the credit. Projects that were already in progress before January 1, 2026 may apply, but any expenses incurred prior to this date do not count towards the credit. Projects that were completed before January 1, 2026 do not qualify to participate in the program. 

In order to comply with the end date of this provision, projects must have a documented placed in service date prior to January 1, 2035. Projects that will not be fully completed by that time may be phased so that completed work items are still eligible for tax credits. The THC retains review authority over the entire project, to ensure that all work meets the Standards for Rehabilitation. Applicants that wish to pursue phased projects should contact the THC before submitting their Part B application to ensure that the project and its phasing are adequately described. 

For additional information, or if you have questions about the Texas Historic Preservation Tax Credit program, please contact Tax Credit staff by email or at 512-475-0129. 

For information about the National Register of Historic Places or other historic designations, please contact National Register staff by email or at 512-463-8452.