Texas Certified 59 Data Center Tax Exemptions This Year. Senate Finance Spent 5.5 Hours Asking Why.

On July 27, the Senate Finance Committee spent five and a half hours on Tax Code sections 151.359 and 151.3595, the sales and use tax exemptions for qualifying and large data centers. The interim charge put a $3.3 billion projection in front of members. The number that moved the room was 59.

That is how many data center exemption requests the Comptroller has certified in fiscal 2026 to date. The last published exemption study assumed 12 over six years. When the committee met, the cumulative file stood at 138 certified and 5 pending. On the public lists we track by effective date, the map shows 143.

Full data-center segment (our cut, about 5 hours 30 minutes): youtube.com/watch?v=XFd9XIr9Ej8. Senate archive: video 22654.

Ten certifications landed in the program's first seven years. The rest arrived after 2020. The chart is not a gentle slope. It is a long quiet stretch, then a hard climb.

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The full certification curve

Source: Texas Comptroller data-center exemption lists via Hyperscale · n=143 by effective date · HyperscaleNews.com/map

Cyan is Tax Code §151.359 (qualifying). Gold is §151.3595 (large projects). The white line is cumulative. Year means effective date on the list, not a building opening and not a TDLR permit.

What the exemption covers

§151.359 (2013, HB 1223) creates a temporary exemption from the 6.25% state sales and use tax on tangible personal property that is necessary and essential to a qualifying data center, including electricity. Local sales and use taxes still apply under the regular program. Comptroller certification is required.

§151.3595 (2015) is a separate track for qualifying large data center projects: generally at least 250,000 square feet, $500 million in capital over five years, at least 40 qualifying jobs, and a contract for at least 20 megawatts of transmission capacity. That exemption lasts 20 years and covers state and local sales and use taxes.

This is sales and use tax on equipment and power, not ad valorem property tax. Only single-user facilities qualify. Co-location and multi-tenant sites do not get a state sales tax exemption under these sections. Data centers also do not qualify for former Chapter 313 school agreements or for JETI.

Chairwoman Huffman pre-announced the bill

Chairwoman Joan Huffman told the room where this ends before the argument settled. "I have publicly committed to filing legislation on this issue during the next legislative session." She voted for the original 2013 exemption, as did most of the Legislature, and said the information members were given then "has completely changed."

She set the boundary in the same breath: "No tax exemption should operate on autopilot. Pursuing smart reforms does not mean being unfriendly to business."

A bill is committed for the next session. Its provisions are not. That is why the August model window matters more than any single talking point from the industry panel.

Three maps: empty, pivot, now

The hearing put the certification curve on the record. Geography is the other half. Below are three cumulative snapshots from the same file. Locations are approximate. The point is scale, not parcel precision.

2017: still almost empty

Through 2017: 8 on the list by effective date. Years into the program, most of Texas is still blank. Source: HyperscaleNews.com/map

2022: the year the list stops looking quiet

Through 2022: densification on the eastern half; large-project pins start to matter. Source: HyperscaleNews.com/map

2026 YTD: 143 on the list

Through 2026 YTD: 143 by effective date (aligned with 138 certified + 5 pending on the hearing record). Cyan = §151.359; gold = §151.3595. Source: HyperscaleNews.com/map

If you are an annual Hyperscale News subscriber, you are not limited to these stills. The map at HyperscaleNews.com/map is interactive: detailed information on each point, updated daily, available any time you are signed in.

Electricity is the quiet lever

Brad Reynolds, Chief Revenue Estimator at the Comptroller of Public Accounts, put a peer-state comparison on the record that works as a roadmap. Thirty-eight other states offer some form of data center tax exemption. Thirty-six of those are sales tax exemptions. Of those 36, only 14 include electricity.

Texas is in the minority by exempting power.

Inside the Comptroller's own model, equipment spikes during construction and again at refresh. Electricity is billed every month for the life of the facility, and the model treats it as 100% taxable.

A 25 MW enterprise facility produces about $7.6 million in foregone state sales tax in year one and $22.7 million by year three in that model. A 400 MW hyperscale campus produces $107 million, then $175 million, then $246 million. Several 400 MW-plus facilities are underway in Texas. At least two have been announced at a gigawatt or more.

Narrowing or removing the electricity component is the biggest change available short of repeal. Twenty-two of the 36 peer sales-tax states already exclude it. If you model exemption value on a twenty-year horizon, price power separately from equipment. Those two lines now carry different political risk.

The second lever is the threshold pair. Reynolds testified that peer states generally set lower capital investment requirements and higher job creation requirements than Texas does. Texas asks $200 million in capital and 20 permanent jobs for the ten-year tier under the regular program. That trade is the most likely template for how the thresholds get rewritten.

The capital number that got less airtime

The Comptroller's audit division has opened compliance audits on certificate holders past their five-year mark. Jenny Burleson, Director of Tax Policy, walked the committee through the mechanics. Twenty are complete or in process: six compliant on capital and jobs, six non-compliant, eight still open. The remaining 118 become auditable as each hits its own five-year date.

On the nine facilities where capital investment verification is complete, the statute required $2.7 billion in aggregate. Verified actual investment came in above $9.1 billion, 3.4 times the minimum.

One non-compliant holder asked to reverse its certification after ERCOT canceled its power contract and it could not build to its capital commitment. One missed the square-footage floor. The rest missed the 20-job requirement.

A holder found non-compliant is assessed sales tax on every exemption claim made during the certified period. The facility that surrendered after losing its power agreement faces a back assessment of almost $5.6 million, with payment expected by August 31. Self-reported cases can enter voluntary disclosure and waive penalty. Audit findings carry penalty and interest. Revocation can add up to 5%.

Members pressed on bankruptcy. Collections would run through the Attorney General's office. These tax debts generally survive. Huffman said she wants to make certain taxpayers are not left holding the bag. Expect security or bonding language to show up in draft form.

The sourcing fix is the sleeper

Several members pressed on a mechanic that most same-day coverage skipped. Local sales tax is generally sourced to the seller's location rather than the delivery address, so a rural host county often captures little or none of the local sales tax on hundreds of millions of dollars of equipment installed inside its boundaries. Huffman asked whether anything in statute would prevent a provision sourcing it to the delivery county instead.

Nobody offered a statutory bar. That is the cleanest bipartisan fix surfaced all day, and it is the provision in an eventual bill that moves money toward the communities hosting these projects rather than away from them.

Senator Kolkhorst put the community problem in order

Senator Lois Kolkhorst told the industry what her office hears: water usage, electrical usage, and then noise and light pollution. She described asking an operator whether it could get below a city's 82-decibel limit toward 50 decibels and being told it probably could.

Her assessment was direct. The coalition, she said, has "done a horrible job on working with local communities and on marketing, and particularly working with neighboring property owners." Failing to fix it means "you're gonna get a fight in every community you go to."

Noise and light are cheap at design stage and expensive after a county turns. Operators who volunteer quieter design limits and publish water numbers before anyone compels them are showing what kind of neighbor they intend to be.

The Data Center Coalition entered a PricewaterhouseCoopers impact study: $65.8 billion contributed to Texas GDP in 2024 and more than 428,000 jobs including indirect and induced effects. Vice Chairman Juan Hinojosa answered it on the record. The Comptroller's office did not have those figures independently. Numbers the state can check against its own certification file will carry more weight every session than numbers it cannot.

The deadline is the model, not the gavel

The Legislature does not convene until January 2027. The exemption study that prices the next bill gets drafted in August, reviewed in the fall, and approved under a new Comptroller. Reynolds would not put a revised dollar figure on the record. He said it is "reasonable to expect significantly higher numbers." He also said he will discuss the estimation model with the Data Center Coalition or anyone else who thinks it is unreasonable, because his goal is "a fair representation."

The model is open until executive review. The 2027 bill gets written against whatever comes out of it.

Certification files are the state's evidence. The audit cohort grows every quarter. Site-level numbers that match the Comptroller's own file are the only numbers that will survive the next drafting window.

See the file. Stay on it.

Hearing video (full data-center segment): https://www.youtube.com/watch?v=XFd9XIr9Ej8

Public map: HyperscaleNews.com/map

County boundaries, major cities, and every Comptroller-certified exemption we can place by effective date.

Annual subscribers: the same map with detailed information on each point, updated daily, available any time you are signed in.

Open the map → · Claim a free issue of Hyperscale News →

Sources

1. Senate Committee on Finance, interim hearing on Tax Code §151.359 / §151.3595, July 27, 2026. Full data-center segment (our cut) on YouTube: https://www.youtube.com/watch?v=XFd9XIr9Ej8. Senate archive video 22654: senate.texas.gov/videoplayer.php?vid=22654.
2. Witness list: capitol.texas.gov
3. Comptroller witnesses: Brad Reynolds (Chief Revenue Estimator), Jenny Burleson (Director of Tax Policy)
4. Industry: Dan Diorio, Data Center Coalition
5. Chart and maps: Texas Comptroller data-center exemption lists via Hyperscale, n=143 by effective date (locations approximate). Live map: HyperscaleNews.com/map

Not legal advice. For current application forms and program rules, use the Texas Comptroller's published data-center resources.