States Reconsider Data Center Tax Incentives

Thirty-eight states offer tax incentives to data centers, but lawmakers are increasingly reconsidering those subsidies as costs rise and energy demand surges. At least nine states have already considered repealing data center incentives this year, according to a new report from the National Conference of State Legislatures, while lawmakers in 28 states have introduced bills to scale back or modify existing programs. Connecticut, Georgia and Washington have proposed “off-ramps” that would phase out incentives for future projects. Other states, including Colorado and New Hampshire, have explored new incentives, but with more stringent energy and labor requirements, though none have advanced in 2026.