Virginia Becomes Testing Ground for New Data Center Tax
Summary
Virginia has agreed to add a new tax on electricity used by data centers starting July 2026 and ending before July 2028. This tax aims to raise up to $600 million a year to support the state budget, while new environmental rules will encourage data centers to use more water- and energy-efficient cooling methods.Key Facts
- Virginia will charge data centers $0.011 per kilowatt-hour of electricity starting July 1, 2026, ending before July 1, 2028.
- The tax could generate up to $600 million annually for Virginia’s general fund.
- Any revenue above $600 million will go into a special fund and be refunded to data centers proportionally.
- Virginia is imposing a new tax rather than cutting existing tax breaks for data centers.
- New environmental rules will focus on reducing water use for data center cooling, especially in areas with scarce groundwater.
- The state’s Department of Environmental Quality will create plans to retrofit current data centers to use more efficient cooling systems.
- Some lawmakers want data centers to pay more to fund social programs, while others worry the tax could hurt Virginia’s business climate.
- Northern Virginia has the largest concentration of data centers in the world, with over 200 facilities.
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