Chapter 312, retired 313, and the new JETI — what the abatement actually does

When a company proposes a billion-dollar data-center campus in Texas, it almost always asks for a tax abatement. Three statutes have governed those deals in the last two decades: Chapter 312, Chapter 313, and, since 2024, a new program called JETI. Here is what each one actually does, who approves it, and where the public money moves.

How Texas property tax usually works

Before the abatements make sense, a short version of baseline Texas property tax. When you own property, the county appraises it each year. Several taxing units — the county, the city, the school district, the hospital district, the community-college district — each set a tax rate and apply it to that appraised value. Add all the rates together and you get your property-tax bill. For most homeowners in Texas, the school district's portion is the single largest slice.^[1]

A tax abatement is a legal reduction of the appraised value that a specific taxing unit agrees to, for a specific property, for a set number of years. The other taxing units are unaffected unless they also sign their own abatement.

Chapter 312 — the county and city abatement

Chapter 312 of the Texas Tax Code is the statute most residents are referring to when they say "tax abatement."^[2] It was created in 1987 and lets a city or county exempt up to 100 percent of the value of qualifying new improvements for up to ten years, though most data-center deals land in the 50 to 75 percent range.

Mechanics:

• The taxing unit (city or county) must first adopt "guidelines and criteria" for abatements by resolution.
• The company applies, describing the investment and jobs.
• The taxing unit designates a "reinvestment zone" — the parcel or area eligible for the deal.
• The city or county negotiates the specific terms: abatement percentage, duration, investment threshold, job count, clawback language.
• The commissioners' court or city council votes in open session.
• The agreement is filed with the Texas Comptroller, which publishes it publicly.^[3]

Two practical points worth knowing. First, Chapter 312 only abates the taxing unit's own share — not the school district's. Second, each taxing unit acts independently: a county can grant a 75 percent abatement while the city grants 50 percent or none at all.

Chapter 313 — retired at the end of 2022

Chapter 313 of the Texas Tax Code, formally the Texas Economic Development Act, was a separate program that let school districts reduce a new facility's taxable value for the school's maintenance-and-operations (M&O) tax — the bigger half of most property-tax bills.^[4] It was heavily used for large industrial projects, including data centers, petrochemical plants, and wind and solar farms.

Chapter 313 expired on December 31, 2022. The Legislature declined to renew it after extended debate. Between 2001 and expiration, the Comptroller approved hundreds of 313 agreements representing tens of billions of dollars in abated taxable value statewide.^[5]

JETI — the new school-tax program, effective 2024

In the 2023 session, the Legislature passed House Bill 5 — the Jobs, Energy, Technology and Innovation Act (JETI), now codified at Tax Code Chapter 403, Subchapter T.^[6] It took effect January 1, 2024, replacing Chapter 313.

Three differences matter most:

• New approval path. A JETI application must be approved by the local school board, by the Texas Comptroller, and by the Governor.
• Narrower scope. JETI explicitly excludes renewable-energy generation (wind and solar), retail, banking, and real-estate development. It applies to manufacturing, critical infrastructure, technology (including data centers), and similar categories defined in the statute.
• Higher job thresholds. Minimum job counts are more demanding than under Chapter 313.

JETI does not change Chapter 312 at all. A data-center deal in 2026 commonly involves a Chapter 312 abatement from the county (and sometimes the city) plus, when eligible, a JETI agreement with the school district.

A worked example

Consider a hypothetical $1 billion data-center campus in a Texas county with a total combined property-tax rate of $2.50 per $100 of value — roughly typical across county, city, school, and other taxing units.

Without any abatement, annual property tax on $1 billion of value would be $25 million. If the county grants a 75 percent Chapter 312 abatement on its portion (say $0.40 of the $2.50), and the school district grants a JETI agreement that caps M&O taxable value at $100 million (say the school M&O rate is $0.90 of the $2.50), the math shifts sharply.

Numbers are illustrative. Real abatements vary widely in percentage, duration, phase-in schedule, and clawback conditions. The Texas Comptroller publishes the actual agreements; they are public records.^[3]

The debate, as it actually shows up in committee rooms

Both sides of the abatement argument have serious versions.

Supporters — including some chambers of commerce, economic-development corporations, and many elected officials across both parties — argue that without the abatement, the project chooses another state. They point to the fact that unabated taxes do begin flowing after the abatement expires, that construction generates sales tax, and that data centers bring transmission upgrades that benefit the area.^[7]

Critics — including some fiscal-conservative analysts and some progressive tax-equity groups, who agree more often than one might expect on this issue — note that data centers produce relatively few permanent jobs compared with manufacturing (often 30 to 150 on-site positions for a billion-dollar campus), and that the infrastructure those facilities use (roads, power, water) is built with public dollars.^[8]

Neither side is making things up. The net-fiscal question turns on numbers specific to the deal: what percentage, for how long, with what clawbacks, and with what infrastructure commitments.

What residents can ask for before a vote

Two questions show up repeatedly in informed public comments, across the political spectrum, and they are both answerable from the draft agreement:

1. Total dollar value abated. "What is the total property-tax revenue we are agreeing not to collect over the full term of this agreement, expressed in dollars?" This is a number the county's financial staff can compute from the projected valuation.
2. Clawback conditions. "If the project fails to hit its investment or hiring milestones, what portion of the abatement is recovered, and by what mechanism?" If the answer is "there isn't one," that is itself worth stating in public comment.

Both questions are neutral. They work for a resident who supports the project and wants it well-structured, and for a resident who opposes it entirely.