The JETI Act

Overview

JETI Replaced Chapter 313 With a Narrower School-Tax Limitation

House Bill 5 (88th Legislature, 2023) created JETI in Subchapter T of Chapter 403 of the Government Code, effective Jan 1, 2024, after the Chapter 313 program expired. A company, the local school district and the Governor's office sign an agreement that caps the project's appraised value for school-district maintenance and operations (M&O) taxes at 50 percent for 10 years. Projects entirely inside a federal Opportunity Zone get a 75 percent reduction.

The Texas Comptroller reviews applications, and the Governor and school district must approve. The applicant must show the agreement is a compelling factor in a competitive site selection, listing the alternate sites it considered, and must post a performance bond or parent guarantee before signing.

Requirements

Job and Investment Minimums Scale With County Population

New jobs must pay more than 110 percent of the county average wage for the industry, include group health benefits and run at least 1,600 hours a year. Dispatchable electric generation has no job requirement. Applicants pay a $30,000 fee to the school district.

Eligibility

Dispatchable Power Plants Qualify and Data Centers Do Not

Eligibility follows North American Industry Classification System (NAICS) codes: manufacturing, dispatchable electric generation, natural-resource development, research and development, and critical infrastructure such as water, pipelines and petroleum terminals. Wind, solar and battery storage are excluded. Data processing and hosting falls outside the eligible codes, so data centers cannot apply.

A gas plant built to serve a data center is dispatchable generation, so it qualifies even when the campus it powers does not. The Comptroller recommended Chevron's Energy Forge One in late January 2026, and the Pecos-Barstow-Toyah school board approved it in February. The plant would serve a data center directly without a grid connection; Chevron holds an exclusivity agreement with Microsoft and the fund Engine 1. Grist estimated the break at more than $227M over 10 years. See Microsoft and Chevron in Pecos and Behind-the-Meter Power.

Agreements

Terafab and Four Gas Plants Lead the JETI Agreement List

TeraFab AI holds eight of the 21 agreements, four phases each with Anderson-Shiro CISD and Iola ISD in Grimes County, totaling about $120B; see Terafab Grimes County. All four power plant agreements are classed as fossil fuel electric generation.

Constraints

Data Center Incentives Face the 2027 Legislature

Texas campuses usually combine JETI on the power plant with city and county abatements under Tax Code Chapter 312 or Local Government Code Chapter 381, and the state sales-tax exemption for qualifying data centers. Governor Abbott's Sept 21, 2026 directive said he will work with the Legislature, which convenes in January 2027, to eliminate financial incentives for data centers. JETI itself is scheduled to expire Dec 31, 2033. See Austin Strategic Capital: State.

Related coverage

Related Coverage

• Behind-the-Meter Power
• ERCOT Large Load Interconnection
• Permian Basin Energy
• Texas Data Center Moratorium
• Brownfield Inheritance
• Texas Energy Nexus