If you own a home in Texas, you have probably seen the headlines about the Texas data center tax break. It is easy to assume a tax fight in Austin will land on your bill.
At Ownwell, we help Texas property owners cut what they owe every year, so we want to separate the signal from the noise. The short version: this debate is about a state sales tax incentive, not your property tax.
How Much Are You Over Paying?
Key Takeaways
Texas exempts qualifying data centers from the 6.25% state sales tax on equipment and power. It is a sales tax break, not a property tax break.
Lawmakers are weighing a repeal or scale-back, but as of September 2026, no bill has been filed, and the next session is in 2027.
Foregone state revenue reached at least $1.3 billion this year, and the state's separate two-year projection tops $3.2 billion.
A repeal would not, by itself, change your property tax bill, because the two taxes are separate.
What you control is your own assessment: protest every year and claim every exemption you qualify for.
The Texas Data Center Tax Break, Explained
Texas gives qualifying data centers a temporary exemption from the 6.25% state sales-and-use tax on the equipment and power they need to run. A sales-and-use tax is the tax you pay on most goods when you buy them.
As of September 2026, lawmakers are weighing whether to repeal or scale back this break in the 2027 session. No such change is law yet.
The exemption covers the gear that keeps a data center running. That includes servers, cooling systems, backup generators, network equipment, and electricity, per the Texas Comptroller's data center exemption rules. Qualifying data centers are exempt from the 6.25% state sales and use tax on necessary equipment, while local sales taxes still apply.
The program runs on two tiers, written into Tax Code Section 151.359 and Section 151.3595:
Qualifying data center: a large center that meets size, investment, and jobs thresholds gets a 10 or 15-year exemption from the state portion only.
Qualifying large data center project: a very large project gets a 20-year exemption that also covers local sales tax.
There are limits worth knowing. The break is available only to single-occupant data centers, so multi-tenant colocation facilities do not qualify. Under the standard tier, local sales taxes still apply to qualifying purchases.
The incentive was created to attract capital investment to the state. That is its stated purpose, and lawmakers are now debating whether the trade is worth it.
Why Texas Lawmakers Are Reconsidering the Break
No repeal has passed. A repeal or scale-back is under active discussion for the 2027 session, and nothing about it is settled law today. The reason it is on the agenda comes down to cost.
The price tag has grown fast. The break cost the state about $5.4 million in 2015, climbed past $150 million in 2023, and is forgoing at least $1.3 billion this year. Separately, the state's 2025 forecast projected it would give up at least $3.2 billion over two years. The Comptroller's office says that figure is likely an underestimate.
That trajectory has drawn bipartisan attention. On July 27, 2026, the Texas Senate Finance Committee held an interim hearing on the exemption.
Law-firm analysts now describe it as a serious legislative risk for the 2027 session. Committee Chair Joan Huffman has said she plans to file legislation to repeal or reexamine the break.
Governor Greg Abbott has also pledged to work with the Legislature to repeal it. Because the Legislature holds regular sessions only in odd-numbered years, 2027 is the earliest it could act. Some senators have also discussed whether centers that already hold certifications should keep their break.
One compliance note deserves care. Of 138 qualified centers, 20 had been audited as of July 2026, and 6 of those were found out of compliance. That is a small sample, and it should not be read as the rate across every facility.
None of this is a done deal, and Texas homeowners have heard relief promises before. In our survey of 520 Texas homeowners, 9 in 10 said they are concerned about rising property taxes.
Most remain cautiously skeptical that relief will reach them. That skepticism is well placed here, because this particular break sits on a different tax entirely.
Sales Tax vs. Property Tax: Why a Repeal Would Not Change Your Home's Bill
Here is the point most coverage skips. The data-center break is a state sales tax exemption. Your property tax is a separate, local tax. Repealing the sales-tax break would not, by itself, raise or lower your property tax.
Different authorities set the two taxes. Your county appraisal district sets your property's value, and school districts, cities, counties, and special districts set your rates. Texas has no single statewide property tax rate.
There is an indirect path worth understanding through state budget dynamics, which we cover next. But this sales-tax exemption doesn't directly affect your appraisal.
New to the mechanics? Our guide to how Texas property taxes work breaks down who sets value, who sets rates, and who collects.
How Data Center Growth Could Still Reach Your Wallet
A repeal would not touch your appraisal, but data center growth can still reach households through other channels. These are indirect and evolving, not a claim that a server farm down the road raises your home's value on the tax roll.
Electricity is the most direct link. In June 2026, Governor Abbott directed the Public Utility Commission of Texas (PUCT) and the grid operator to act.
Their charge is to make large electric loads pay their own infrastructure costs, a move meant to protect residential electric customers. In plain terms, those costs should fall on the companies building the centers, not on households.
There is also the total-cost picture. Even when property taxes fall, other line items can offset the win. Our look at rising Texas homeownership costs shows how utilities and insurance can quietly eat into tax savings.
Finally, one budget principle matters here: when the state forgoes revenue or grants relief to one group, the burden can shift elsewhere over time. We walked through this pattern when we covered the 2025 Texas property tax relief measures, where the math often just shifts rather than disappears.
The takeaway is not fear; it is focus. The levers you can pull sit on your own tax bill.
How Much Are You Over Paying?
What Texas Property Owners Can Actually Control
You cannot vote on a data center's certification, but you can lower your own bill. Most Texas homeowners never do.
From 2023 to 2025, Texas property owners across 17 counties left $3.31 billion in savings unclaimed. Only about 32% of the residential properties we studied protested in 2025. Two levers do the work: protesting your assessment and claiming every exemption you qualify for.
Protest Your Assessment Every Year
In Texas, you file a protest, not an appeal, to challenge your value. The county appraisal district (CAD) sets your value, and you protest to the Appraisal Review Board (ARB).
The 2026 protest deadline was May 15, or 30 days after your notice of appraised value arrived, whichever was later. The 2027 deadline is expected to fall around the same date.
After processing more than a million appeals, we have found the outcome usually comes down to three to five well-chosen comparable sales. Here is how a reduction turns into dollars.
Suppose we win a $30,000 cut on a $400,000 home, using the state's median effective rate near 1.48% from our Texas property tax trends data.
Line item | Before protest | After protest |
|---|---|---|
Assessed value | $400,000 | $370,000 |
Effective tax rate | 1.48% | 1.48% |
Annual tax bill | $5,920 | $5,476 |
Annual savings | $444 |
That $444 is illustrative, not a promise, but it shows why the math is worth your time.
Claim Every Exemption You Qualify For
Exemptions lower the value you are taxed on before any protest. The general residence homestead exemption removes $140,000 from your school-district taxable value.
Owners who are 65 or older or disabled add another $60,000 off school taxes. A 10% homestead cap also limits how much your appraised value can rise each year.
The math is simple subtraction. A $400,000 home with the $140,000 school-tax homestead exemption is taxed on $260,000 of school-district value, before any protest reduction.
The 2026 homestead filing deadline was April 30, and the 2027 deadline is expected around the same date. File early if you have not yet claimed yours, and our Texas property tax exemptions service can file and manage it for you.
Unsure Which Exemptions You Qualify For?
Commercial and investment owners have their own lever to watch. A 20% cap on annual appraised-value increases has applied to non-homestead property valued at or below roughly $5.32 million.
That circuit breaker is scheduled to expire at the end of 2026 unless the Legislature renews it. If it lapses, commercial valuations could move more freely, so watch your notices closely and protest when the evidence supports it.
How Ownwell Can Help Texas Property Owners
We handle property tax protests and exemptions end-to-end, from paperwork to the ARB hearing. You never have to build the case yourself.
Our 25% contingency model means you pay only if we save you money, with no upfront cost. You can review the full details on Ownwell's pricing page.
The proof is in the numbers our customers see:
Success rate: 88% of Ownwell customers who protest receive a reduction.
Average savings: Ownwell customers save an average of $774 per year.
Track record: We have processed more than 1 million appeals and hold a 4.7-star rating across 3,000-plus Google reviews.
A repeal is uncertain and years away. Your protest and your exemptions are available now, and that is where your savings actually live.
Frequently Asked Questions
Is Texas repealing the data center tax break?
Not yet. A repeal is under discussion for the 2027 session, and no bill had been filed as of September 2026.
Does the data center tax break raise my property taxes?
No. It is a state sales tax exemption, which is separate from the local property tax on your home.
Will data centers raise my electric bill?
State regulators have been directed to make large data-center loads pay their own infrastructure costs, a step meant to shield residential ratepayers.
What was the 2026 Texas property tax protest deadline?
It was May 15, or 30 days after your appraisal notice arrived, whichever was later. The 2027 deadline is expected around the same date.
When does the Texas Legislature meet next?
In 2027. The Legislature holds regular sessions only in odd-numbered years, so 2027 is the earliest it could act on the exemption.
