Texas Prefiles Five Bills Repealing Data Center Sales Tax Break
Bipartisan Texas bills would end the 6.25% sales tax exemption for data centers, now projected to cost $3.3 billion by 2028-29, with 138 certified facilities facing divergent treatment in the House and Senate bills.
On the first day of Texas prefiling for the 2027 session (November 9, 2026), at least five bills were filed to repeal the state's sales tax exemption for data centers, including HB 167 by Rep. Trey Martinez Fischer and SB 293 by Senate Finance Chair Joan Huffman, which 23 of 31 senators and members-elect had signed by that evening. The exemption (Tax Code §§ 151.359, 151.3595) shields qualifying facilities from the 6.25% state sales tax on servers, cooling systems, generators, software and electricity for up to 15 or 20 years; the comptroller now projects a $3.3 billion cost for 2028-29, against $14.6 million originally estimated. The bills diverge on the 138 already-certified facilities: HB 167 would let existing certifications run to term, while SB 293 as described would end them on the effective date, and both would deny pending comptroller applications. Separately, the governor has paused ERCOT interconnection approvals and TCEQ permits pending an audit due in December, and a Zaffirini package would require a PUC construction permit for sites of 75 MW or more. Counsel should watch committee hearings, the ERCOT audit, and tax pass-through and change-in-law clauses in leases, colocation agreements and power contracts; the outcome is uncertain at this stage.