Tax & Budgets, Data Centers
States Rethink Data Center Tax Incentives as Costs Soar
February 4, 2026 | Morgan Scarboro
State data center tax incentives have grown dramatically, with Virginia's program now estimated at $1.6 billion annually, reflecting both lost revenue and substantial economic investment. Virginia data center legislation is under review, with bills like HB 897, SB 393, and HB 784 proposing new energy standards, additional taxes, and increased transparency for data center tax incentives. The data center sales tax exemption remains the most common incentive, but some states are considering repealing or limiting these benefits, while others are looking to expand them. State tax credits and other incentive programs are being debated in legislatures across the country, with upcoming hearings in states like New Hampshire and Nebraska likely to shape future policy directions.
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