Texas Data Center Tax Break Projected to Cost $3.1 Billion Over Two Years
Texas is set to lose $3.1 billion in sales tax revenue over the next two years due to tax exemptions for data centers. This rapidly growing financial liability has led lawmakers to consider potential reforms or repeal of the tax break, which has become one of the state's most expensive incentive programs.
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The Texas comptroller's office estimates a loss of at least $3.1 billion in sales tax revenue over the next two years due to tax breaks for data centers. By fiscal year 2030, the annual value of these exemptions is projected to reach nearly $1.8 billion.
The rapid growth of data centers in Texas, now exceeding 300 facilities with over 142 under construction, has prompted lawmakers to reconsider the long-term sustainability of these tax incentives. Critics argue that the tax breaks are unnecessary for attracting investment, as factors like cheap land and energy are more influential. The legislature will review the tax break during hearings in July, exploring options including reduction, expiration limits, or enhanced economic development requirements.
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