Yes — a PILOT can exist without a tax abatement — but it’s important to understand what that really means, because it works very differently than most people assume.
This explainer focuses on how PILOTs work in Texas, especially at the county level.
What is a PILOT?
A PILOT is a Payment In Lieu Of Taxes.
It is not a tax.
It is a voluntary payment a company agrees to make by contract.
In simple terms:
“Even though we don’t owe this money as taxes, we’ll agree to pay the county a certain amount each year.”
The common misconception
Many people assume:
“If we don’t grant a tax abatement, we can still require a PILOT.”
That is not true.
Without a tax abatement, the county cannot require a PILOT.
How PILOTs usually work in Texas
In Texas, PILOTs most often appear as part of a Chapter 312 tax abatement agreement.
In that structure:
- The county reduces taxable value for a period of time
- The company agrees to guaranteed PILOT payments
- The PILOT helps offset lost tax revenue
- Both sides receive predictability
In this scenario, the PILOT is enforceable because it is tied to the abatement contract.
PILOTs without an abatement (what changes)
A PILOT can exist without an abatement, but:
- It is purely voluntary
- The county has no leverage to require it
- Payments depend entirely on goodwill
- Enforcement depends on a separate contract
- The company can often walk away more easily
Without an abatement, a PILOT is better described as a voluntary contribution or community benefit payment.
Why companies rarely offer PILOTs without abatements
From the company’s perspective:
- They are already paying full property taxes
- There is no financial incentive to add extra payments
- The risk and cost are entirely on their side
That’s why PILOTs without abatements are uncommon, especially for large industrial projects.
The leverage reality (this matters)
A tax abatement is the county’s primary leverage.
- With an abatement:
The county can negotiate guaranteed payments, protections, and conditions. - Without an abatement:
The county can ask — but cannot require.
This is why PILOT discussions almost always happen in the context of abatements.
A clear way to think about it
- Abatement + PILOT = negotiated deal with leverage
- No abatement + PILOT = voluntary agreement with limited leverage
Both are legal. They are not equally powerful.
Why this matters for residents
Understanding this distinction helps explain:
- Why counties are cautious about granting abatements
- Why denying an abatement may cause a company to walk away
- Why “just get a PILOT instead” is not as simple as it sounds
A decision about an abatement isn’t just about taxes — it’s about who carries the risk and who has leverage.
Key takeaway
A PILOT can exist without a tax abatement, but without an abatement it is voluntary, weaker, and far less common. The abatement is what gives the county leverage to negotiate guaranteed payments.
For a deeper explanation, see What Is a Tax Abatement?