Politics
Huffman Files Bill to End Data Center Tax Breaks, Citing $3.3 Billion Cost to Texas Taxpayers
State Sen. Joan Huffman has filed Senate Bill 293 to repeal Texas's data center sales tax exemptions, warning that a subsidy once projected at $14.6 million will now cost the state roughly $3.3 billion over the next two years. A majority of senators have signed on as joint authors, signaling broad support for ending the incentives.
HOUSTON â State Sen. Joan Huffman, R-Houston, filed legislation Monday to repeal Texas's sales tax exemptions for data centers, arguing that a subsidy created more than a decade ago has ballooned far beyond what lawmakers intended and is now draining billions from the state treasury.
Senate Bill 293 would repeal Tax Code Sections 151.359 and 151.3595, ending the exemptions on the bill's effective date. Applications still pending with the Texas Comptroller on that date would be denied.
A majority of senators have joined Huffman as joint authors of the measure, according to her announcement â a signal of unified support for scrapping the incentives.
"Texas should welcome investment. It should not write a blank check," Huffman said. "When this exemption was created in 2013, the cost to taxpayers was about $14.6 million in the first biennium. The Comptroller now estimates forgone sales tax revenue in the range of $3.3 billion for the coming biennium. That is not what the Legislature voted for more than a decade ago, and it is not sustainable."
The exemption was originally pitched as a way to attract technology investment to Texas. Huffman argued that the program has since become a permanent giveaway with no accountability.
"No tax exemption should run on autopilot," she said. "Requiring these projects to pay the same sales tax other Texas businesses pay is not anti-growth. It is responsible stewardship of the revenue that funds schools, public safety, and the rest of state government. If a project makes sense in Texas, it should make sense without a multi-billion-dollar subsidy."
The proposal arrives as data center construction has surged across Texas, driven by demand for cloud computing and artificial intelligence. Supporters of the exemptions have long argued that the incentives help Texas compete with other states for major technology projects and the jobs they bring.
Critics, including Huffman, counter that the forgone revenue â now estimated in the billions â outweighs the economic benefits, especially as the state faces pressure to fund public schools, infrastructure and other services. The debate also comes amid growing scrutiny of data centers' heavy demands on electricity and water, issues that have drawn attention in communities across the state.
The bill's fate will depend on the full Legislature when it convenes. With a majority of senators already signed on as joint authors, the measure enters the process with significant momentum.