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HB 5588

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.

89th Legislature (2025) Introduced by Cody Harris

Texas bill exempts data center real property and energy equipment from ad valorem taxation to incentivize facility development while reducing local tax revenue.

Referred to Ways & Means
#energy--general(i0315) #propertyinterests--personalproperty(i0600) #taxation--property-appraisals&appraisaldistricts(i0792) #taxation--property-assessment&collection(i0798) #taxation--property-exemptions(i0793) #taxation--sales(i0800)
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Bill Summary · HB 5588

Legislative bill overview

HB 5588 proposes a property tax exemption in Texas for real property and energy-related equipment used in data centers. The exemption would cover both the land/buildings and tangible personal property (such as power generation and cooling systems) dedicated to meeting the data center's energy needs.

Why is this important

Data centers are capital-intensive facilities that generate significant tax revenue for counties and school districts. This exemption would reduce local government revenue while potentially incentivizing data center development and investment in Texas, which could create jobs but also shift tax burden to other property owners.

Potential points of contention

  • Revenue impact: School districts and county budgets could lose substantial tax revenue, potentially requiring tax rate increases or service cuts
  • Economic incentive justification: Questions about whether tax exemptions are necessary to attract data centers, or if they simply benefit profitable corporations at public expense
  • Equity concerns: Other property owners and small businesses would bear a relatively larger tax burden if major industrial facilities receive exemptions
  • Scope ambiguity: The definition of "tangible personal property used to meet energy demand" could be interpreted broadly, potentially exempting more equipment than intended

Compiled from official sources — confirm details with the bill’s official record.

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