By 1878 the town had 1,000 residents and thirty-two businesses, twenty-nine of which were destroyed by fire in 1879. Recovery was rapid, however, and more substantial buildings were constructed. In 1882 the Taylor, Bastrop and Houston Railway reached the community, and machine shops and a roundhouse serviced both rail lines. In 1882 the town was incorporated with a mayor-council form of city government, and in 1883 a public school system replaced a number of private schools.

 By 1890 Taylor had two banks and the first savings and loan institution in Texas. An electric company, a cotton compress, and several newspapers were among the new enterprises. A water line from the San Gabriel River; a 100-man volunteer fire department; imported and local entertainment; and an annual fair; made noteworthy news items by 1900.