No State Income Tax
Federal 100% Bonus Depreciation with Zero State Income-Tax Adjustment
Franchise (Margin) Tax on Revenue Above the No-Tax-Due Threshold
Texas’s Business-Level Tax
22–35% Typical Reclassification
Texas Building Value into Short-Life Assets
Headquartered in Texas
Serving Every Texas Metro & All 50 States
The Basics
What Cost Segregation Does for Texas Property Owners
A cost segregation study identifies building components, HVAC systems, specialty flooring, parking surfaces, interior finishes, and exterior lighting that qualify for accelerated depreciation on 5-, 7-, or 15-year schedules rather than the default 27.5-year (residential rental) or 39-year (commercial) building schedule. Front-loading those deductions increases first-year cash flow and lowers current-year federal taxable income.
In Texas, this is one of the cleanest cost segregation environments in the country. Texas has no state individual income tax and no state corporate income tax, meaning federal 100% bonus depreciation restored by the One Big Beautiful Bill (OBBBA, P.L. 119-21) applies with zero state income-tax adjustment. Every federal dollar of accelerated depreciation drops straight to the taxpayer’s federal savings, no addback, no dual income-tax schedule, no decoupling math. Texas does levy a franchise (margin) tax at the business level, but it operates on a different base than income tax.
No State Income Tax = No Income-Tax Complications
Texas’s Tax Landscape: Why Cost Segregation Is Clean Here
Individual Income Tax
None. Texas is one of nine states with no state individual income tax (the ban is written into the Texas Constitution).
Corporate Income Tax
None. Texas has no state corporate income tax.
Franchise (Margin) Tax
Texas imposes a franchise tax the “margin tax” on entities whose annualized total revenue exceeds the no-tax-due threshold (approximately $2.47M–$2.65M for reports due in 2026; confirm current-year figure with the Texas Comptroller). Rates run 0.75% of taxable margin for most entities, 0.375% for retail and wholesale trade, and an EZ-computation rate of 0.331% for entities with $20M or less in total revenue. Critically, the margin tax is computed on gross revenue less the largest of several deductions (cost of goods sold, compensation, 30% of revenue, or a fixed amount) — not on net income, and federal depreciation deductions do not directly reduce it. Cost segregation’s benefit in Texas is therefore almost entirely a federal-tax benefit.
Bonus Depreciation Conformity
Not applicable for income tax Texas has no income tax to conform or decouple. Federal §168(k) bonus depreciation applies at the federal level with no state income-tax consequence.
179 Expensing
Not applicable at the state income-tax level. Federal §179 (2026 cap $2.56M, indexed; $4M+ phaseout) applies at the federal level only.
Sales & Use Tax
State sales tax is 6.25%, with local option taxes up to 2%, for a combined maximum of 8.25%.
Property Tax
High roughly 1.6%–1.7% effective on commercial and residential property, among the highest in the country. Texas has no state property tax; rates are set locally by counties, cities, school districts, and special districts. This is a separate lever from income tax and is not reduced by a cost segregation study, though it is a major carrying-cost consideration for Texas owners.
§481(a) Catch-Up
For Texas properties owned more than a year without a study, an automatic accounting-method change (Form 3115 under Rev. Proc. 2015-13 and its updates) captures all missed depreciation into the current tax year at the federal level no amended returns required.
Every Commercial Asset Class in Texas
Texas Property Types Where Cost Segregation Delivers
Energy & petrochemical
Houston Ship Channel refining and petrochemical complex, Permian Basin operations (Midland-Odessa), Beaumont/Port Arthur and Corpus Christi. Processing facilities carry heavy specialty-equipment and land-improvement content.
Corporate & tech campuses
Austin (Tesla, Samsung, Oracle, Apple), DFW Metroplex corporate relocations, and Houston energy-corridor office, with substantial tenant-improvement and specialty-systems content.
Logistics & distribution
I-35 corridor (DFW to San Antonio-Austin), I-45 (Dallas-Houston), and Gulf Coast port logistics. Texas is one of the country’s leading distribution hubs.
Medical & healthcare
Texas Medical Center in Houston (the largest medical complex in the world), plus San Antonio and DFW medical districts. High specialty-systems content.
Multifamily
Booming across Austin, DFW, Houston, and San Antonio metros, among the most active multifamily development markets in the U.S.
Data centers
DFW, San Antonio, and Central Texas data center corridors, with specialty electrical and cooling infrastructure content.
Retail & mixed-use
Statewide retail centers and mixed-use developments across all major metros.
Short-term rental (STR) property
Austin, Hill Country, Gulf Coast (Galveston, Port Aransas), and Fredericksburg destination rentals. Cost segregation is especially valuable for STR operators actively involved in the business.
Investment residential
5+ unit properties eligible for cost segregation.
Not sure whether your Texas property qualifies? Request a free benefit analysis, we’ll tell you honestly.
Texas-Based. Credentialed. Independent
Why The Ambrose Group?
MAI-certified appraisers, in-house engineer
The IRS prefers engineering-based studies over rule-of-thumb estimates. Our in-house engineer conducts the analysis, reviews construction documents, and physically identifies reclassifiable components. Many providers estimate; we don’t.
IRS-compliant methodology
Every Ambrose study follows the IRS Cost Segregation Audit Techniques Guide (ATG, Publication 5653).
Headquartered in Texas
Based in Jersey Village, we know Texas commercial real estate firsthand and serve every Texas metro directly, plus all 50 states.
Full audit support
Every study includes documentation and audit support at no additional charge.
CPA-ready reports
We deliver a complete reclassification package your CPA can apply directly.
Single-property to multi-state portfolios
Whether you own one Texas commercial building or a portfolio spanning multiple states, we scale the engagement to fit.
Real Numbers
What First-Year Savings Might Look Like in Texas
Results depend on property type, cost basis, construction year, and applicable depreciation rates, and we run a free benefit analysis before you commit to a study so you can see projected numbers first.
As a reference point, an Ambrose Group engagement on a $2.9M commercial property delivered $657,692 in first-year depreciation increase and $230,192 in first-year tax savings. In Texas specifically, the Year 1 savings come from the federal deduction, Texas’s lack of a state income tax means no state income-tax adjustment on either side, and the franchise margin tax is computed on a different base that federal depreciation does not directly reduce.
Get Started
Free Texas Cost Segregation Benefit Analysis
Tell us about your Texas property, asset type, acquisition or construction cost, when it was placed in service, and we’ll run a free benefit analysis showing projected first-year depreciation and tax savings before you commit to a study.
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Right approach for your property type
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Federal benefit modeled (no state income-tax adjustment needed)
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Clear read on the study’s projected ROI
Prefer to talk? Call us directly:
(713) 688-7733
The Ambrose Group headquarters, Jersey Village, TX.
Request Your Free Analysis
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How It Works, Texas & Nationwide
Our Cost Segregation Process
What Clients Say
See why property owners, investors, and CPAs have trusted The Ambrose Group for 30+ years. Read client reviews.
Cost Segregation in Texas
Frequently Asked Questions
Does Texas conform to federal bonus depreciation rules?
For income-tax purposes there’s nothing to conform, Texas has no state individual or corporate income tax. Federal §168(k) 100% bonus depreciation restored by OBBBA applies at the federal level with zero state income-tax adjustment, no addback, no dual schedule. Texas is one of the cleanest cost seg states in the country.
Does cost segregation reduce my Texas franchise (margin) tax?
Not directly. The Texas franchise tax is computed on taxable margin, gross revenue less the largest of cost of goods sold, compensation, 30% of revenue, or a fixed amount, not on net income, so federal depreciation deductions don’t flow through to reduce it. Cost segregation’s benefit in Texas is almost entirely a federal income-tax benefit.
What Texas commercial property types benefit most from cost segregation?
Houston energy and petrochemical facilities, Permian Basin operations, Austin and DFW tech and corporate campuses, Texas Medical Center and other healthcare property, I-35/I-45 logistics and distribution, and multifamily across every major metro. Energy processing, medical, and data center properties typically carry the highest specialty-systems content.
Can I do a cost segregation study on a Texas property I’ve owned for years?
Yes. A §481(a) adjustment via an automatic accounting-method change (Form 3115 under Rev. Proc. 2015-13 and its updates) lets you capture all missed depreciation from prior years into the current tax year without amending past returns. Especially valuable for long-held Houston, DFW, Austin, and San Antonio commercial property.
You’re headquartered in Texas, does that help?
Yes. We’re based in Jersey Village and work Texas property firsthand, so most engagements involve an in-person site visit by our own engineer, and we know Texas commercial markets, construction practices, and property records directly. For remote or well-documented properties, a virtual inspection is also available. Both approaches are IRS-compliant.
What construction era of Texas property produces the strongest cost segregation outcomes?
Properties placed in service since 1987 are eligible under current IRS guidance, and studies limited to the last 7–10 years tend to deliver the strongest ROI. Texas’s sustained energy, tech, medical, and multifamily construction boom has produced enormous newer commercial property in the ideal window.
Does Texas’s high property tax affect the cost seg decision?
Not directly, cost segregation reduces federal income tax through accelerated depreciation, while property tax is a locally assessed carrying cost (roughly 1.6%–1.7% effective, among the highest in the country). They’re separate levers, but Texas’s high property-tax burden makes maximizing every available federal deduction, including accelerated depreciation, that much more valuable to owners.
What documentation do you need for a Texas cost segregation study?
Purchase or construction cost documentation, a current depreciation schedule from your CPA, construction plans or specs (when available), any prior appraisals, and, for renovation studies, improvement records. We provide a specific document checklist when we scope the study.
Can you handle Texas multi-property portfolios?
Yes. We regularly run cost segregation studies across Texas-only and multi-state portfolios, common for Houston and Permian energy operators, DFW and Austin multifamily owners, medical and healthcare operators, and logistics and industrial portfolio owners.
How long does a cost segregation study take on a Texas property?
From engagement to CPA-ready report, most studies run 4–8 weeks depending on property complexity, document availability, and site-visit scheduling. Large refining, medical, or data center facilities can take longer proportional to the equipment-cataloging effort.
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Contact
Talk to Trusted Cost Segregation Consultants
We live by our motto: “Everything we do is driven by the relationship, not the transaction”, and we mean it. Whether you have a Texas property to evaluate or a multi-state portfolio to review, we’re here to help. Contact our real estate firm.