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The JETI Act

JETI — the Jobs, Energy, Technology and Innovation Act — is the Texas property-tax incentive that appears in the footnotes of nearly every large AI-industrial deal in the state. It shows up because it is the mechanism that lowers the tax bill on a multibillion-dollar campus, and understanding it explains a piece of why the buildout is landing in Texas rather than elsewhere. It also contains a twist that most coverage misses: JETI excludes data centers outright, yet data centers are among its biggest beneficiaries. The bridge is the power plant.

What JETI is

Signed in 2023 and effective January 1, 2024, JETI (House Bill 5, codified in Chapter 403 of the Government Code) replaced the expired Chapter 313 program. It gives a qualifying project a 10-year limitation on its school-district maintenance-and-operations appraised value — a 50% reduction, rising to 75% in a federal Opportunity Zone. School-district taxes are the largest line on a Texas property-tax bill, so a 10-year M&O limitation on a gigawatt campus is worth a great deal.

The trade is jobs and investment, tiered by county population:

750,000+ population — 75 jobs, $200 million investment.
250,000 to 749,999 — 50 jobs, $100 million.
99,999 or fewer — 10 jobs, $20 million.

Jobs must pay at least 110% of the county average wage, include health benefits, and run at least 1,600 hours a year; construction jobs do not count. Applications go to the Comptroller and require sign-off from the Governor and the local school district, plus a performance bond worth 10% of the estimated 10-year benefit. Unlike its predecessor, JETI requires the applicant to show the agreement was a determining factor in site selection — not merely a compelling one — which is a higher bar meant to stop the state paying for investment that would have come anyway. The program is scheduled to sunset December 31, 2033.

The exclusion that matters

JETI narrowed eligibility sharply from Chapter 313. Eligible activities are defined by NAICS code, and the qualifying categories are advanced manufacturing, dispatchable electric generation, natural-resource development, and high-tech infrastructure and R&D. Two categories are pointedly excluded: renewables and energy storage — solar, wind, and standalone batteries do not qualify — and, in practice, data centers, whose NAICS classification falls outside the eligible set.

So on paper, the facility type driving the entire Texas buildout cannot use the state's marquee tax incentive. That would seem to break the connection between JETI and the AI story. It does not — because of how these campuses are built.

The dispatchable-generation bridge

JETI's eligible list includes dispatchable electric generation, and the legislature meant it literally: the program was designed to encourage new firm generation to strengthen the grid. Natural gas qualifies; wind and solar, being non-dispatchable, do not. Nuclear qualifies.

Every flagship AI campus in Texas now pairs its compute with a dedicated, dispatchable, on-site power plant — the behind-the-meter model the buildout converged on. That power plant is JETI-eligible even though the data center it serves is not. The result is that the generation half of a co-located campus can carry a JETI value limitation while the compute half cannot, and the incentive attaches to exactly the component the state wants to reward: new firm power on the grid's doorstep.

This is why JETI and behind-the-meter generation are two sides of one decision. An operator building its own gas plant to skip the interconnection queue is also building the one part of its campus that qualifies for the state's largest tax break. The policy and the engineering point the same way. Amp Z's Longleaf gas plant at the old Lufkin paper mill takes a separate Chapter 381 county abatement on the same logic; Saronic's Port Alpha shipyard, a qualifying manufacturer, is a straightforward JETI project. The pattern repeats because the structure rewards it.

The open question

Whether a data center can ever qualify directly turns on NAICS-code interpretation — specifically whether code 518210 (data processing and hosting) can be read into an eligible category. As of 2026 the safe reading is that it cannot, and operators route the benefit through generation and through local-option abatements instead. It is a live question the Comptroller could clarify, and one worth watching: a ruling that admitted data centers directly would reshape the incentive math for every campus in the state.

Where it sits

JETI is one layer of a stack. A Texas AI campus typically combines the state sales-tax exemption for qualifying data centers (10 to 15 years), local-option property-tax abatements from cities and counties under Chapter 312 or Chapter 381, and a JETI M&O value limitation on the generation asset. Layered together, these are a large part of why the numbers on a Texas campus close. JETI is the piece that specifically rewards bringing firm power — the same firm power the interconnection queue and the moratorium make so valuable. The incentive structure and the grid constraint push in the same direction: build your own dispatchable generation, and Texas will help pay for it.

Last updated September 11, 2026. JETI is scheduled to sunset December 31, 2033. NAICS eligibility for data centers is unsettled; confirm current Comptroller guidance before relying on it. This page is reference, not tax advice.