A growing number of U.S. states are pausing or repealing lucrative tax incentives for data centers. These policy reversals could increase equipment costs for operators by 7% or more.
Arizona, Illinois, and Washington recently moved to curtail these tax breaks. Major hubs including Virginia and Georgia are also debating the future of their incentive programs.
Lawmakers cite the immense strain AI-driven data centers place on local power grids and water supplies. Individual state incentive programs can cost over $1 billion annually. Officials are now questioning if economic benefits justify these public expenses and resource consumption.