- Texas has been losing more every year from the lack of data center taxes
- Before just a few million, the state could lose $1.3 billion in 2026 alone
- Supporters say the benefits include significant investments and other tax revenue.
The state of Texas could lose $3.2 billion in sales tax revenue over the next two years due to a long-standing tax break that exists for data centers, one of the state’s most expensive incentive programs.
However, this figure is a general estimate, and increasing data center construction could actually mean even more taxes are being missed.
Furthermore, the figure has increased substantially in recent years, resulting in around $1.3 billion in exemptions in 2026, compared to around $150 million annually in 2023 and 2024 and between $5 and $30 million annually between 2014 and 2022.
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Texas Data Center Tax Breaks Are Getting More Expensive Than Ever
Talking about the loss of income with the Texas GrandstandState Senator Joan Huffman explained: “These new numbers are extremely concerning and I will say they are unsustainable.”
Lawmakers are now questioning whether the tax breaks are still sustainable and are exploring reducing them or eliminating them entirely. “I plan to look into introducing legislation to repeal the exemption or look at it very closely and see,” Huffman added.
Billions in lost revenue now prevent public funding for services like schools and disaster recovery.
However, Texas’ position as one of the most tax-generous states has led to major projects being located in the state, including OpenAI’s Abilene campus under Project Stargate. Four of Stargate’s data centers were projected to create 25,000 on-site jobs; two of those centers are located in Texas.
Supporters of the plan argue that tax incentives attract major investments like those above and generate other tax revenue.
Other states with tax incentives for data centers, including Virginia, Illinois, Michigan, Arizona and Georgia, are also exploring future options amid concerns about sustainability.
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