The powerhouse that is Texas will continue full throttle into 2026 — and most likely through the whole year. According to the Texas Demographic Center, the state’s booming population reached 30.5 million, an increase of 4.7 percent from April 2020 to July 2023. The center expects Texas’ population to reach 42.6 million in 2060.
From these new citizens alone, Texas needs a constantly expanding supply of buildings, roadways, pipelines, transit systems, data centers, schools, and hospitals. And that is only part of the picture. Texas is an economic powerhouse with a $2.7 trillion economy, the eighth largest in the world, according to the Texas Economic Development Council. People from all over the world depend on Texas for services and products, from roadbed aggregates to bio-engineered molecules.
For the construction industry, Texas’ economic strengths mean that opportunities in 2026 will stay strong, across all sectors.
Another critical factor in Texas is that state government is an active player. Like most states, the Texas Department of Transportation (TxDOT) depends on state and federal fuel taxes to fund transportation initiatives.
But unlike most states, TxDOT benefits from additional, dedicated funding from vehicle registration fees, sales taxes (via Proposition 7), and oil and gas severance taxes (via Proposition 1). TxDOT’s fiscal year 2026-2027 budget totals $39.92 billion, a 6.5 percent increase over fiscal year 2024-2025. Only California’s DOT has a larger budget.
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In 2024, Texas established a new Texas Energy Fund to help finance construction, maintenance, modernization, and operation of electric facilities.
Similarly, the state is a big player in constructing schools, universities, and medical facilities.
This partnership model expands in 2026. In November 2025, Texas voters approved “Proposition 4 - Securing Texas’ Water Future,” to provide dedicated funding, up to $1 billion annually, for long-term water supply and infrastructure projects through 2035. Since this is dedicated funding, project sponsors going forward will not need to depend on annual appropriations or deal with the fallout if that money does not come through.
Henson noted strong momentum with TxDOT programs moving into 2026, and he highlighted the agency’s priorities on safety, efficiency, and transparency. He added, though, that there are conversations about refining review processes. These discussions could shorten the time between planning and construction. Henson said that “streamlining environmental clearances, for instance, could help bring major roadway and bridge projects to construction faster, particularly projects in high-growth areas where congestion relief is immediate.”
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Another topic on AGC’s radar for 2026 is TxDOT’s focus on sustainability and workforce participation. He noted that TxDOT’s requirements are evolving pertaining to materials recycling, stormwater management, and minority- and women-owned subcontracting. But he commented further that “the department has done a good job of engaging industry early in those discussions. ... Collaboration between public owners and contractors is key to maintaining efficiency and cost-effectiveness as policies take shape.”
Regarding the ongoing labor challenges, Henson said that AGC of Texas is investing heavily in workforce development. He noted that policy discussions around immigration and workforce eligibility certainly impact the construction industry. For the workforce, he said the bottom line comes down to “investing in people and creating pathways into good careers, providing training and the support that makes those careers sustainable.”
In 2026, the state’s workforce activities expand further as a new workforce education effort gets underway within the Texas State Technical College (TSTC) system. This effort focuses on training in the skilled trades, from welding to heavy equipment operation to electrical technologies. The initiative results from the November 2025 passage of the statewide ballot issue “Proposition 1 - Investing in Workforce Training.” TSTC is based in Waco, Texas, but it has 11 campuses throughout the state.
Proposition 1 establishes two permanent funds for workforce development. The funds will initially receive $850 million. TSTC will use the money to expand campus facilities, purchase equipment, and acquire land. Development can proceed with a long-term focus since the funding comes from a state constitutional amendment, making it set and permanent. Program sponsors do not have to keep returning to the legislature, seeking money to keep the programs going.
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AGC of Texas supported Proposition 1. In a message to its members, it called the proposition “a significant step forward in addressing the skilled labor shortage.” The association said it is an investment that “strengthens the pipeline of qualified workers. That means contractors and infrastructure employers will have access to a stronger, better-trained workforce to meet project demands.”
Given this pro-growth set of policies, it is expected that 2026 will see big projects continuing and new ones getting underway. Some of that upcoming work is detailed down below.
At the end of Texas’ 89th legislative session in early June 2025, TxDOT’s biennial budget settled out at $39.92 billion for 2026-2027 — $21.2 billion in fiscal year 2026 and $18.72 billion in fiscal year 2027. That sum was provided in Senate Bill 1 (SB 1), the General Appropriations Bill that provides funding for all of state government. (That figure does not include $504.1 million provided by HB 500, a supplemental appropriations bill that earmarked additional money for specific projects for TxDOT.)
In August 2025, Texas Governor Greg Abbott announced a total projected investment of over $146 billion in the state’s new 10-year Unified Transportation Plan (UTP).
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“We must strengthen our roadways and improve congestion and safety to keep our economy booming and keep Texans moving,” Abbott said. “By investing billions of dollars in our transportation network today, we will build the future of Texas for generations to come."
Many of the projects in the 2026 UTP are roadway segments identified on Texas’ 100 Most Congested Roadways list. Funding for Texas Clear Lanes congestion relief projects will increase by nearly $2 billion. Not surprisingly, new projects align with growth and expansion within the state’s four largest metropolitan statistical areas: Dallas-Fort Worth, Austin, San Antonio, and Houston. (More than one-third of Texas counties lost population from 2020 to 2023.)
Compared to road and highway funding, money for rail projects in Texas is sparse. SB 1, for example, references the Texas Rail Plan. The bill mentions that TxDOT should make it a “top priority” to seek federal funding for the plan. SB 1 does provide $10 million for two railroad crossing projects on Hirsch Road in Houston. And it provides $10 million to fund projects related to the Texas State Railroad, based in Palestine, Texas. The road is an excursion line running through Piney Woods in East Texas.
New legislation also addresses rail safety going forward. Specifically, Senate Bill 1555 allows TxDOT to administer grants for pedestrian and roadway rail grade separation projects.
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With Texas having some of the most important port and maritime activity in the nation, the biennial budget supports port connectivity. Senate Bill 1939 ensures that interest earned on the Ship Channel Improvement Revolving Fund remains in the fund to support further maritime infrastructure investments.
As noted above, Proposition 4 will increase demands for pipelines and construction of related water service infrastructure. However, there are sequential steps still to come to develop this new program. Water planning in Texas is facilitated through 16 regional water planning groups, overseen by the Texas Water Development Board.
Kaci Woodrome is Interim Chief Communications Officer for the board. She explained that Proposition 4 funding is contingent on sales tax revenue exceeding $46.5 billion in fiscal year 2028. Then, that excess revenue has to be formally transferred, via the legislature, to the Texas Water Fund (TWF). Woodrome expects Proposition 4 money will be available in fall 2029.
The TWF is the overarching fund that can provide money for a range of water projects across 10 funding categories. The funding could be used, for instance, to correct flooding or to build new service pipelines for communities or for agricultural needs.
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Thousands of upcoming projects are presented within a number of extensive databases available on the board’s website. For example, two State Revolving Funds for drinking water and clean water present their 2026 lists of priority projects on the website.
Regarding workforce development, Cannon said that TPA views Proposition 1 as a “critical investment in Texas’ infrastructure future, economic vitality, and workforce strength.” He commented that as Texas “continues to expand and diversify, we must remain prepared — both in materials and manpower — to support critical projects that deliver safe energy systems, reliable utilities, and sustainable growth.”
The Texas Railroad Commission maintains yearly listings of planned oil and gas pipeline projects from companies seeking permits for various projects, ranging from natural gas distribution and gathering lines to lines for hazardous liquid transmission. The biggest project slated for 2026 (so far) is construction of a new 219-mile natural gas transmission system for Trident Intrastate Pipeline, a system extending through nine counties. The smallest is a 0.1-mile hazardous liquid transmission line to be built in Harris County for Magellan Operating Company, LLC.
Numerous projects are underway at the airports serving Texas’ four biggest metro areas. Houston’s $2.5 billion Terminal B transformation is expected to be finished in fall 2026. Dallas-Fort Worth is expanding Terminal C, its busiest terminal, and building a new Terminal F. The Austin-Bergstrom International Airport is expected to start work on its Barbara Jordan Terminal in 2026.
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At San Antonio International Airport, extensive work continues on the $1.4 billion new terminal, scheduled for completion in 2028. The project is part of the airport’s 20-year, $2.5 billion strategic development program. 2026 will also see the conclusion of projects that started in 2025, from apron construction to access roadways.
TxDOT will also be working on aviation projects. HB 500, passed in the recent session, provides $106.8 million for TxDOT’s Aviation Services to undertake a series of regional airport projects. This upcoming work includes:
- $10 million for the South Texas International Airport at Edinburg to help fund new aids to navigation and engineering work to plan for an expanded runway
- $14.8 million for new terminal construction, slated to start in summer 2026, at McKinney National Airport
- $40 million for upgrades at Reese Airport in Lubbock
- A $15 million senior care hospital in San Antonio
- A $120 million maximum security center in Rio Grande
- A $573 million replacement for the Terrell State Hospital
The relatively new demand for data centers also sets high demands for energy and water infrastructure. Tian Su, Ph.D., is a researcher with Texas A&M University’s Texas Real Estate Research Center. In May 2025, Su published a blog post titled "AI, Land, and Power: Inside Texas’ Data Center Explosion.”
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Su notes that Texas has positioned itself as a premier market for data centers, which demand highly specialized construction. She refers to data center demand as one of the most “future-proofed opportunities in commercial real estate today.” A map within her report shows that Texas has over 340 data centers.
Su specifically mentions a $500 million project by Colovore in Williamson County and an EdgeConneX project in Cedar Creek, Texas. Construction on some project phases concludes in 2026, but the following phases will continue over the next few years. She writes that Texas’ “vast land availability, business-friendly regulations, and relatively affordable power (compared to coastal states) make it an attractive location for major tech firms and hyperscale operators.”
Finally, the new federal Stargate Project got its start in Abilene, Texas, where the system’s first AI data center recently opened in September 2025. This is one of a series of such centers to be built across the U.S. Supporters want the Stargate system completed by 2029. The total estimated price tag of the project is $500 billion.
Su concludes her blog post with the observation that “the AI revolution isn’t just happening online. It’s being built acre by acre right here in Texas. What began as a quiet tech migration has become a full-on infrastructure rush. In Texas, land is no longer just land — it’s also bandwidth, energy, and scalable infrastructure.”
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Since 2017, the Texas Legislature has invested more than $2.5 billion to replace and renovate hospitals across the state, including new hospitals in Houston, Dallas, Lubbock, and Amarillo. The Texas Department of Health and Human Services (HHS) maintains a web page of ongoing hospital projects under construction. The recent 89th Session did not provide any new funds for hospital construction. However, construction continues into 2026 for projects funded in the 88th Session. These projects include:
These projects should be completed in 2027.
Ray Perryman is Founder and CEO of the Waco, Texas-based Perryman Group, which specializes in economic modeling and forecasting and related public policies. Perryman is a seasoned observer of the Texas business scene.
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Providing his crystal ball predictions for 2026, Perryman said that “Texas is well positioned for sustained growth over a long-term horizon. For well over a decade, the state has attracted more new corporate locations and expansions than any other, and frequently tops various lists of the best places to do business.”
There are challenges on the horizon. Perryman noted, for example, that substantial electric power transmission and generation facilities are needed to meet the massive expansion in AI and data centers. Permitting could be slow. Tariffs are increasing the cost of construction materials, and immigration policies are creating workforce challenges.
Perryman added that “business cycles are inevitable, but Texas is likely to weather them well.”
Estimated Cost: $1.95 billion
Project Delivery Method: Design-build
Projected Let Date: June 2026
Project Description: This project will construct a four-lane tollway, along with a couple of two-lane frontage roads on SH 99 Segment B-1.
Estimated Cost: $475.3 million
Project Delivery Method: Design-bid-build
Projected Let Date: July 2026
Project Description: This project will reconstruct IH-35 ML at Manor Road, 32nd Street, and a frontage road (FR) from Concordia Avenue to 40th Street; partially reconstruct a northbound FR from Manor Road to 51st Street, and southbound FR from Concordia Avenue to 51st Street; reconstruct bridges at Manor Road, 32nd Street, and 38 1/2 Street; and improve drainage.
Estimated Cost: $295.3 million
Project Delivery Method: Design-bid-build
Projected Let Date: March 2026
Project Description: This project will reconstruct IH-35 and interchanges at Uniroyal Drive and SH 84.
Estimated Cost: $228.5 million
Project Delivery Method: Design-bid-build
Projected Let Date: January 2026
Project Description: This project will improve a left exit interchange over Union Pacific Railroad.
Estimated Cost: $166.1 million
Project Delivery Method: Design-bid-build
Projected Let Date: May 2026
Project Description: This project will provide operational improvements, including a direct connector improvement from U.S. 281 to IH 410 westbound; ramp revisions; and frontage road and intersection improvements.
Estimated Cost: $155.7 million
Project Delivery Method: Design-bid-build
Projected Let Date: April 2026
Project Description: This project will widen SH 99 Segment E from four to six lanes (toll).
Estimated Cost: $147 million
Project Delivery Method: Design-bid-build
Projected Let Date: February 2026
Project Description: This project will construct a new two-lane undivided highway and railroad grade separation.
Estimated Cost: $136.5 million
Project Delivery Method: Design-bid-build
Projected Let Date: April 2026
Project Description: This project will widen U.S. 75 from four lanes to six lanes.
Estimated Cost: $123 million
Project Delivery Method: Design-bid-build
Projected Let Date: June 2026
Project Description: This project will add two main lanes for a six-lane freeway and construct overpass structures.
Estimated Cost: $119.9 million
Project Delivery Method: Design-bid-build
Projected Let Date: July 2026
Project Description: This project will widen a two-lane road to a four-lane divided highway with depressed median.
