Several bills have been filed in the Texas Legislature this week to repeal tax exemptions and financial incentives for data center projects.
One of the most significant bills, Senate Bill 293 by State Sen. Joan Huffman (R–Houston), was authored by 23 of the 30 state senators and has three companion bills filed in the Texas House.
The legislation would remove certain sales tax exemptions for gas and electricity sold to qualifying data centers and large data centers.
Additionally, the legislation would repeal three provisions in the Tax Code relating to sales, excise, and use tax exemptions for certain data centers and large data centers, and describing data centers’ relation to property tax limitations.
The bill would render all ongoing data center sales and use tax exemption entitlements as expired at the time of the bill’s effective date, and any pending applications for the same would be considered denied on the same date.
House Bill 167 authored by State Rep. Trey Martinez Fischer (D–San Antonio), House Bill 408 by State Rep. Carrie Isaac (R–Wimberley), and House Bill 681 by State Rep. Cody Vasut (R–Angleton) are all listed as companion bills to SB 293, and all seek essentially the same amendments and repeals as the senate bill with some modifications.
State Sen. Charles Perry (R–Lubbock), along with fifteen other state senators, has filed Senate Bill 338, a more general bill addressing several data center issues.
SB 338 addresses property tax abatements for data center projects, but also specifies conditions under which a governor or school district might terminate an agreement with such a project. The bill adds several requirements to data center agreements “entered into under [Section 403.612, Government Code] between the governor, a school district, and an applicant pertaining to an eligible project that is a data center,” including requiring the use of certain approved cooling systems, a submitted document estimating the facilities’ water usage, and that the facilities pay the cost for any environmental harm to the property caused by the facility at any stage in its life cycle.
State Sen. Roland Gutierrez (D–San Antonio) filed Senate Bill 296 which, among other actions, establishes a two-year temporary moratorium, and State Sen. Judith Zaffirini (D–Laredo) filed five bills on Monday pertaining to data centers and “large load customers.”
Several state representatives, including State Reps. Mary Gonzalez (D–San Elizario), Salman Bhojani (D–Euless), Brent Money (R–Greenville), and Jessica Gonzalez (D–Dallas), also filed bills relating to data centers, in addition to the companion bills listed above.
The bills address issues ranging from tax exemptions to noise study requirements, water usage, and mitigation of “offensive land use.”
The filings come as SpaceX recently announced plans to invest more than $74 billion in two supercomputing campuses in Texas and Arizona. According to reports, the Texas Starbase facility would generate its own electricity, utilize dry cooling, and create at least 500 permanent jobs once completed.
The Lone Star Infrastructure Coalition, a group of data center developers, energy companies, and infrastructure firms dedicated to “transparently communicating the economic case for data centers and power projects,” has not responded to a request for comment on the slew of recent filings relevant to data centers.
Texas’ 90th Legislative Session begins on January 12, 2027.
