October 20, 2026

Data centers have become one of the fastest-growing property types in Texas. A new working paper from Rice University’s Baker Institute for Public Policy, “How the Data Center Boom Affects the Texas Tax Base,” puts numbers on that growth and on what it means for local property tax rolls. The paper was written by John W. Diamond, director of the Center for Tax and Budget Policy, with fellow Joyce Beebe and student intern Sarah Phillips. It is a working paper and has not been through full editorial review.

Investment is surging. The authors estimate that annual Texas data center investment grows from about $3.4 billion in 2022 to roughly $66 billion in 2026. Their main data source is a facility database of 1,100 Texas records: 220 active facilities, more under construction, and others announced, delayed, canceled or withdrawn. They combine it with reported project costs and appraisal district account records. They also cite outside signals of the scale, including Google’s announced $40 billion investment in Texas cloud and AI infrastructure.

The tax rolls lag the pipeline. The paper separates several measures that are often confused: project cost, installed capital, appraised market value and taxable value. County appraisal districts only record a property after it enters the tax system, so facilities that are announced or under construction are not yet in current values.

Taxable value is well below market value. Based on linked district values, the industry’s taxable value falls short of its market value. The authors treat the gap as a screen for exemptions, value limitations and abatements, not a count of agreements. They also note that the Comptroller’s survey of appraisal districts was only a partial response and likely understates statewide value.

Why it matters. For owners, lenders and local governments, data centers are large, specialized assets whose cost, market value and taxable value can differ a lot. Understanding how each is measured is the starting point for sound valuation and property tax analysis.

Source: John W. Diamond, Joyce Beebe and Sarah Phillips, “How the Data Center Boom Affects the Texas Tax Base,” Baker Institute for Public Policy, Rice University, October 2026.

https://www.bakerinstitute.org/research/how-data-center-boom-affects-texas-tax-base