Data centers would pay sales tax on their equipment and lose their enterprise zone benefits
What it does
HB 851 would repeal the sales and use tax exemptions that data centers and large data center projects now receive, and end the separate electricity exemption for certified data centers. It would also make a data center ineligible for enterprise project tax refunds, so a business in an enterprise zone could not get money back for taxes paid on items bought for a site where a data center sits or is to be located. Under the bill, a governmental body could not give a data center a benefit, rebate, reduction, waiver, or exemption through the enterprise zone program, and a site with a data center could not be named a qualified business site at all. The changes take effect September 1, 2027, and taxes owed before that date stay under the old rules.
What it means for your community
Texas data centers would pay sales and use tax on what they buy, and that money would be owed to the state and to local sales tax areas. Cities and counties that handed out enterprise zone incentives to land a data center could no longer do that, and a designation made in violation of the new rules would be void. Facilities owned and operated by the state, a city, a county, or a public college are excluded, and so is equipment that supports a hospital's or another business's own operations when housing that equipment is not the primary use of the site. This bill does not change the sales tax rate on anything you buy, so your own sales tax bill would not go up.
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