Data Centers

In the Name of Tax Fairness, Politicians Propose Special Tax Penalties on Data Centers

State and federal policymakers are attempting to exclude data centers from run-of-the-mill tax exemptions.

Christian Britschgi | 9.18.2026 2:48 PM

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(Illustration: Adani Samat/Midjourney/Jumizanzainah/Dreamstime)

Data centers are horribly unpopular right now. 

Critics' erroneous allegations that these facilities consume excessive amounts of water and power while passing on the costs to the rest of us has seen public support for them collapse. Policymakers have responded with onerous new land use regulations, and even full-on moratoriums, on new data center projects. 

Not content with zoning these projects out of existence, politicians are now looking to tax them into oblivion as well. 

At the federal level, and in dozens of states, legislators are proposing to exclude data centers from various business tax incentives and exemptions. 

In Congress, Sens. Mark Warner (D–Va.) and Ron Wyden (D–Ore.) have both proposed bills that would exclude data centers from certain tax exemptions for capital investment. Wyden's bill would also levy a new gross receipts tax on data enters. 

The National Conference of State Legislatures reports that 28 states have considered legislation to pare back or eliminate "tax incentives" provided to data centers, with the most common target being........

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