Bill > HB5588

This bill proposes a property tax exemption for qualified data centers in Texas, specifically targeting large-scale facilities of at least 100,000 square feet dedicated to housing servers and related equipment for data processing, storage, and distribution. To qualify, a data center must have specific infrastructure characteristics like an uninterruptible power source, generator backup power, sophisticated fire suppression systems, and enhanced physical security. Additionally, the data center must use its backup power systems to meet all of its energy demands and have a contract to provide energy or ancillary services to the ERCOT (Electric Reliability Council of Texas) power grid or another power grid. If these conditions are met, the property owner would be exempt from paying property taxes on the entire appraised value of the data center building, the land it sits on, and the tangible personal property used for energy generation. The bill is contingent on voter approval of a related constitutional amendment and would take effect on January 1, 2026, applying only to ad valorem tax years beginning on or after that date.

Budget and Finance

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB5588