Investment into data centers continues to increase significantly as the country builds out infrastructure to accommodate the digital economy and growth of artificial intelligence. Many states, including Texas, have now implemented various tax incentives to encourage investment in the state while simultaneously grappling with the taxable aspects of data center fuel. In November 2025, the Texas Comptroller of Public Accounts issued a private letter ruling addressing whether hydrogen is a “gas” which qualifies under the exemption, finding against the taxpayer and concluding that hydrogen is not a “gas” and therefore is not exempt from sales and use tax.
