Data Centers
State Data Center Policy Shifts as Governors Impose New Restrictions
June 22, 2026 | Morgan Scarboro, Kim Miller
Texas Governor Greg Abbott directed state regulators to ensure data centers pay for their own electric infrastructure costs and outlined 2027 legislative priorities including repealing sales tax exemptions for data centers, but stopped short of proposing a moratorium. Arizona enacted a three-year pause on its data center sales tax exemption through June 2029, though Governor Katie Hobbs had initially sought to eliminate the exemption entirely. Illinois Governor J.B. Pritzker paused data center tax incentives starting July 1st and encouraged lawmakers to adopt additional restrictions during the fall veto session, including residential ratepayer protections and water permitting requirements. Virginia remains divided over its data center sales tax exemption, with the Senate now proposing an impact fee instead of eliminating the exemption, while the House has suggested a data center accountability study.
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