Twenty-three of the Texas Senate’s 31 members signed on Nov. 9 as authors of Senate Bill 293 (90th Legislature), a bill by Sen. Joan Huffman of Houston that would repeal the state’s sales tax exemptions for data centers and end every exemption already granted on the day the law takes effect. Three House bills filed the same day would repeal the same breaks, but would let data centers already certified keep them until their terms run out.
Currently, Texas is forgoing more than $1 billion a year in sales tax on equipment and electricity used by large data centers, according to comptroller estimates reported by The Texas Tribune. Huffman, who chairs the Senate Finance Committee, said in a statement first reported by Fox 26 Houston that the comptroller now puts the lost revenue at about $3.3 billion in the coming two-year budget, up from about $14.6 million in the first two years after lawmakers created the break in 2013. “Texas should welcome investment. It should not write a blank check,” Huffman said.
The bill text, read by The Texas Dispatch, repeals the two provisions of the Tax Code that give certified data centers and “large data center projects” a sales tax exemption on servers, cooling and other equipment, and removes their exemption on the electricity they use. Under Section 5 of the bill, an exemption a data center holds on the effective date “expires on that date.” Applications pending at the comptroller’s office would be treated as denied. The bill takes effect immediately if two-thirds of each chamber votes for it; otherwise it takes effect Sept. 1, 2027.
The list of authors is itself a signal. A bill needs 16 votes to pass the 31-member Senate, and 23 senators are listed as joint authors on the bill’s authors page, among them Paul Bettencourt, Lois Kolkhorst and Royce West, who pressed comptroller staff about the exemption at a July hearing, along with Carol Alvarado and Judith Zaffirini.
In the House, House Bill 167 by Rep. Trey Martinez Fischer of San Antonio, House Bill 408 by Rep. Carrie Isaac of Dripping Springs and House Bill 681 by Rep. Cody Vasut of Angleton carry nearly identical text. They repeal the same sections and deny pending applications. But each says the repeal “does not affect” a data center certified before the effective date, which may keep its exemption “until the data center’s or large data center project’s exemption period … expires.” In plain terms, the companies already in the program would keep their breaks for years; only new projects would pay full sales tax.
Two more House bills go further than the trio but differ from the Senate bill. House Bill 750 repeals both exemptions effective Sept. 1, 2027, and includes no clause preserving existing certifications. House Bill 851 by Rep. Vince Perez of El Paso does the same and also bars data centers from the state’s enterprise zone program, which offers state tax refunds to projects in designated areas.
The scale of the program explains the stakes. As of April, 121 data centers were receiving the exemption, according to a comptroller database cited by The Texas Tribune, and the comptroller’s office projected the annual cost would reach nearly $1.8 billion by fiscal 2030. To qualify, a smaller data center must invest at least $200 million over five years and create at least 20 jobs paying at least 120% of the area’s median wage, the Tribune reported.
The industry argues the exemption pays for itself over time. At a Senate Finance hearing in July, covered by The Texas Dispatch, Dan Diorio of the Data Center Coalition, a trade group whose members include large technology companies, compared the break to Texas’ treatment of manufacturing equipment and said that “by defraying some of the cost of the inputs, it fosters continuous reinvestment in the facility,” according to Texas Public Radio. The industry maintains that counting only forgone revenue overlooks the construction and investment the facilities bring, TPR reported.
Huffman’s answer is that the policy has outgrown its purpose. “If a project makes sense in Texas, it should make sense without a multi-billion-dollar subsidy,” she said. The 90th Legislature convenes in January, and the first test will be whether the House follows the Senate’s version or the grandfather clause in its own.
Key facts
- SB 293 (Huffman) filed Nov. 9, 2026, with 23 of 31 senators as authors; ends existing data center sales tax exemptions on its effective date and denies pending applications (bill text, Sec. 5).
- HB 167, HB 408 and HB 681 (filed Nov. 9) repeal the same exemptions but let already-certified data centers keep them until their terms expire.
- HB 750 and HB 851 repeal the exemptions effective Sept. 1, 2027, with no clause preserving existing certifications; HB 851 also bars data centers from enterprise zone benefits.
- Huffman’s statement puts forgone revenue at about $3.3 billion for the coming biennium, per the comptroller (Fox 26 Houston, Nov. 9).
- 121 data centers were receiving the exemption as of April 2026 (Texas Tribune, citing a comptroller database).