Bill Text: TX HB167 | 2027-2028 | 90th Legislature Regular Session | Introduced

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Bill Title: Relating to the repeal of the exemptions from sales and use taxes for property used in certain data centers and large data center projects.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced) 2026-11-09 - Filed [HB167 Detail]

Download: Texas-2027-HB167-Introduced.html

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90R1509 SRA-D
By: Martinez Fischer H.B. No. 167

A BILL TO BE ENTITLED
AN ACT
relating to the repeal of the exemptions from sales and use taxes
for property used in certain data centers and large data center
projects.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 151.317(a), (b), and (d), Tax Code, are
amended to read as follows:
(a) Subject to Section [Sections] 151.1551[, 151.359, and
151.3595] and Subsection (d) of this section, gas and electricity
are exempted from the taxes imposed by this chapter when sold for:
(1) residential use;
(2) use in powering equipment exempt under Section
151.318 or 151.3185 by a person processing tangible personal
property for sale as tangible personal property, other than
preparation or storage of prepared food described by Section
151.314(c-2);
(3) use in lighting, cooling, and heating in the
manufacturing area during the actual manufacturing or processing of
tangible personal property for sale as tangible personal property,
other than preparation or storage of prepared food described by
Section 151.314(c-2);
(4) use directly in exploring for, producing, or
transporting, a material extracted from the earth;
(5) use in agriculture, including dairy or poultry
operations and pumping for farm or ranch irrigation;
(6) use directly in electrical processes, such as
electroplating, electrolysis, and cathodic protection;
(7) use directly in the off-wing processing, overhaul,
or repair of a jet turbine engine or its parts for a certificated or
licensed carrier of persons or property;
(8) use directly in providing, under contracts with or
on behalf of the United States government or foreign governments,
defense or national security-related electronics, classified
intelligence data processing and handling systems, or
defense-related platform modifications or upgrades;
(9) [use directly by a data center or large data center
project that is certified by the comptroller as a qualifying data
center under Section 151.359 or a qualifying large data center
project under Section 151.3595 in the processing, storage, and
distribution of data;
[(10)] a direct or indirect use, consumption, or loss
of electricity by an electric utility engaged in the purchase of
electricity for resale; or
(10) [(11)] use in timber operations, including
pumping for irrigation of timberland.
(b) The sale, production, distribution, lease, or rental
of, and the use, storage, or other consumption in this state of, gas
and electricity sold for the uses listed in Subsection (a), are
exempted from the taxes imposed by a municipality under Chapter 321
except as provided by Section [Sections 151.359(j) and] 321.105.
(d) To qualify for the exemptions in Subsections (a)(2)-(8)
[(a)(2)-(9)], the gas or electricity must be sold to the person
using the gas or electricity in the exempt manner. For purposes of
this subsection, the use of gas or electricity in an exempt manner
by an independent contractor engaged by the purchaser of the gas or
electricity to perform one or more of the exempt activities
identified in Subsections (a)(2)-(8) [(a)(2)-(9)] is considered
use by the purchaser of the gas or electricity.
SECTION 2. Section 321.208, Tax Code, is amended to read as
follows:
Sec. 321.208. STATE EXEMPTIONS APPLICABLE. The exemptions
provided by Subchapter H, Chapter 151, apply to the taxes
authorized by this chapter, except as provided by Section [Sections
151.359(j) and] 151.317(b).
SECTION 3. Section 323.207, Tax Code, is amended to read as
follows:
Sec. 323.207. STATE EXEMPTIONS APPLICABLE. The exemptions
provided by Subchapter H, Chapter 151, apply to the taxes
authorized by this chapter, except as provided by Section [Sections
151.359(j) and] 151.317(b).
SECTION 4. The following provisions of the Tax Code are
repealed:
(1) Section 151.359;
(2) Section 151.3595; and
(3) Section 313.009.
SECTION 5. (a) The repeal by this Act of Sections 151.359
and 151.3595, Tax Code, does not affect the ability of a data center
or large data center project certified by the comptroller of public
accounts as a qualifying data center or qualifying large data
center project before the effective date of this Act to continue to
receive the exemption from sales and use taxes provided under
Section 151.359 or 151.3595, Tax Code, as applicable, until the
data center's or large data center project's exemption period
provided under the applicable section expires, subject to any
limitation provided by the applicable section, and the former law
is continued in effect for that purpose.
(b) An application submitted to the comptroller of public
accounts for certification as a qualifying data center or
qualifying large data center project that is pending on the
effective date of this Act is considered to be denied and may not be
approved by the comptroller.
SECTION 6. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2027.