The bill, S.B. No. 2222, proposes an exemption from ad valorem taxation for the total appraised value of real property designated as a data center, as well as the tangible personal property utilized by the data center to meet its energy demands. A new section, Section 11.38, is added to the Tax Code, defining a "data center" as a facility of at least 100,000 square feet that is specifically constructed or refurbished for housing servers and related equipment, and which meets certain operational criteria, including having an uninterruptible power source and generator backup. The bill also defines "qualified data center" and "qualified property," establishing the conditions under which property owners can claim the tax exemption.

The bill stipulates that the exemption applies only to ad valorem tax years beginning on or after its effective date, which is set for January 1, 2026. However, this implementation is contingent upon the approval of a constitutional amendment proposed by the 89th Legislature, Regular Session, 2025, that would authorize such tax exemptions. If the amendment is not approved by voters, the bill will have no effect.

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