Virginia has approved what appears to be the nation’s first tax on data center electricity use

Virginia has approved what appears to be the nation’s first tax on data center electricity use. A legislative deal, which ends months of budget negotiations, imposes a new charge on the power used by data centers in the Commonwealth as of July 1. But the compromise stops short of rolling back the long-standing and controversial sales tax exemption on equipment that has helped fuel Virginia's massive data center industry. For most residents, the immediate impact of the new tax will likely be indirect, since the data center tax revenue will flow into the Commonwealth's general fund. Notably, under the budget compromise, the Virginia Department of Environmental Quality would play a larger role in regulating data centers. The agency, currently responsible for protecting Virginia's air, water, and land resources, would study data center impacts, create rules, and oversee limits on issues including noise and water use.