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March 12, 2026

Virginia has a data center boon. Officials debate whether it's time to scrap its tax breaks

  • Other states are putting a pause on similar tax breaks as they review rising electric bills and water usage.
    • By OLIVIA DIAZ and MARC LEVY
    Associated Press

    RICHMOND, Va. — Nearly two decades ago, Virginia gave tech companies a tax break on equipment and software, and they began to build. The state became a data center hub, and they kept building. Residents bemoaned the noise while they built some more. Artificial intelligence boomed, and the power grid strained — still, more building.

    Now, amid a growing national pushback on data centers, Virginia senators have voted to end a projected $1.6 billion annual tax break, requiring the industry to resume paying a minimum 5.3% sales tax. The proposal has left some opponents warning that it would bring construction of data centers in Virginia to a screeching halt.


     
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