Data Center Tax Breaks at Risk as States Rethink Cost and Impact

Persistently high energy costs and tougher budget pressures are likely to keep data center tax breaks on the chopping block in many states, even as their lawmakers have mostly rejected a wholesale repeal of those incentives.

State lawmakers, while largely siding with industry so far this year, have sought to impose restrictions and reporting requirements on energy and water use to obtain sales tax exemptions that together have saved billions of dollars for tech giants such as Meta, Amazon, and Microsoft.

Those provisions include mandating that data centers—critical engines powering the artificial intelligence revolution—cover the cost of new ...