Parker Bill Zeroes Out Property Tax On Big Data Centers

The text as introduced · 449 words

89R15034 RDS-D

By: Parker
S.B. No. 2222

A BILL TO BE ENTITLED

AN ACT

relating to an exemption from ad valorem taxation of the total

appraised value of real property used as a data center and the

tangible personal property used by the data center to meet the data

center's demand for energy.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by

adding Section 11.38 to read as follows:

Sec. 11.38. DATA CENTER GENERATING ELECTRICITY. (a) In

this section:

(1) "Data center" means at least 100,000 square feet

of space in a single building or portion of a single building, which

space:

(A) is specifically constructed or refurbished

and actually used primarily to house servers and related equipment

and support staff for the processing, storage, and distribution of

data;

(B) is used for the processing, storage, and

distribution of data;

(C) is not used primarily by a telecommunications

provider to place tangible personal property that is used to

deliver telecommunications services; and

(D) has an uninterruptible power source,

generator backup power, a sophisticated fire suppression and

prevention system, and enhanced physical security that includes

restricted access, video surveillance, and electronic systems.

(2) "Qualified data center" means a data center that:

(A) uses the data center's uninterruptible power

source and generator backup power to meet all of the data center's

demands for energy; and

(B) has entered into a contract to provide energy

or ancillary services to the ERCOT power grid or another power grid.

(3) "Qualified property" means:

(A) a single building or portion of a single

building used as a qualified data center;

(B) the parcel of land on which the qualified

data center is located; and

(C) tangible personal property located at the

qualified data center that is used to meet the data center's demands

for energy as described by Subdivision (2)(A).

(b) A person is entitled to an exemption from taxation of

the total appraised value of qualified property the person owns.

SECTION 2. The changes in law made by this Act apply only to

an ad valorem tax year that begins on or after the effective date of

this Act.

SECTION 3. This Act takes effect January 1, 2026, but only

if the constitutional amendment proposed by the 89th Legislature,

Regular Session, 2025, to authorize the legislature to exempt from

ad valorem taxation the total appraised value of real property used

as a data center and the tangible personal property used by the data

center to meet the data center's demand for energy is approved by

the voters. If that amendment is not approved by the voters, this

Act has no effect.