Texas Keeps Building: 2026, A Record Year for Investment and Job Growth

This article originally appeared in the October 2026 edition of Development Incentives Quarterly.

By: Justin Heather

Texas has spent the first three quarters of 2026 doing what it does best — outearning the rest of the country.  What explains the engine that is Texas?  The state has no corporate or personal income tax, a very favorable regulatory environment, companies and high earners, and has repeatedly been recognized as having the best business climate in America.  In addition to these and many other factors, Texas has attracted hundreds of corporate headquarters over the last 10 years.  One of those factors is Texas’ incentive toolbox, especially the state-level incentives directed at attracting large-scale investment.

Texas’ Economy and Accolades

The state economy sits at roughly $2.9 trillion, making it the eighth-largest economy in the world.  The most recent Bureau of Labor Statistics (BLS) report placed total nonfarm payroll at $14.47 million, another record month, and a 1.1% year-over-year growth in employment.  Indeed, Texas led the nation in job growth for the fourth year in a row.

Texas won its 14th-straight Governor’s Cup for the most business location and expansion projects, and it took the Prosperity Cup as the top state for attracting investment.  In 2025 alone, the state secured $21.5 billion in foreign direct investment (FDI) — second-most in the nation — and Business Facilities magazine named it the best business climate in America for the fourth year running.

Texas’ Incentive Toolbox

Every state offers incentives and Texas is no exception.  Incentives are meant to tip the scales when a company is choosing between two viable sites in competing states.  Texas created a robust toolbox of incentives at both the local and state levels.  Like so many other factors that set Texas apart, its state level incentives also stand out.

In 2023, Texas replaced its much-maligned Texas’ Economic Development Act (Chapter 313) with the Jobs, Energy, Technology and Innovation (JETI) program in an effort to increase its return on investment.  JETI provides updated incentives for manufacturing, high‑tech infrastructure, dispatchable electric generation, natural resource development and other qualifying projects.  JETI incentivizes projects in targeted industries where the applicant demonstrates that the incentive is a “compelling factor” in the site selection process.  The agreement for approved JETI projects provides for a 10-year school district maintenance and operations (M&O) tax appraised value limitation.  In 2026, it appears that JETI is coming into its own.

The state also boasts the Texas Enterprise Fund (TEF), Texas’ “deal-closing” fund, a program that is the envy of many economic developers.  TEF awards cash grants to companies considering a new project for which a Texas site is competing with an out-of-state option.  The grants are performance-based financial incentives for projects that will contribute significant capital investment and new employment to the state’s economy.  The current fiscal year is poised to be a record year, with contracted projects representing nearly 15,000 direct jobs and almost $9.8 billion in capital investment.  In addition, announced TEF projects in contracting reflect commitments of almost 11,000 new jobs and $110 billion in investment.

TEF and JETI are often stacked, and coupled with other state and local incentives, to secure large-scale projects.  Several recent project announcements demonstrate the effectiveness of these incentives:

• Terafab/Space Exploration Technologies: With over $106 billion in capital investment commitments, and the creation of at least 3,000 jobs, the joint development by Tesla, SpaceX, xAI and Intel recently broke ground. The project is designed to consolidate chip design, fabrication, memory production, advanced packaging and testing.  The project received both TEF and JETI awards, with an estimated value of over $1.6 billion to support the development.
• Saronic Technologies: Investing more than $3.2 billion and committing to the creation of 10,000 new jobs, Saronic is building what it calls the largest shipyard in the nation in support of maritime defense. Saronic received an $80 million TEF award, the largest in program history.  Additionally, the local school district approved JETI agreements providing an estimated tax benefit of almost $229 million.
• Eli Lilly: Eli Lilly recently announced a $5.7 billion investment in a Houston manufacturing site that is projected to create 550 new jobs. In order to secure the project, Texas awarded the company a $5.5 million TEF grant, and the company secured a JETI agreement with an estimated value of $146 million.
• Toyota: Toyota doubled its manufacturing footprint in San Antonio with a $3.6 billion investment and the creation of 2,000 new jobs. In addition to several local incentives, Toyota was also awarded a $20 million TEF grant and entered into a JETI agreement with a projected value of approximately $39 million.

Texas has many attributes that set it apart, from its business-friendly climate to its robust workforce.  In the increasingly competitive world of site selection, however, Texas has continued to distinguish itself from other states.  Texas’ recent success in securing several massive investments demonstrates the importance of the targeted use of incentives to secure these projects.