Illinois

Virginia Officials Debate Whether It's Time to Scrap Tax Breaks for Data Centers

Virginia senators are pushing to curtail a 5.3% tax break for data centers

Associated Press

Mar 11, 2026 — 4 min read

Photo of Virginia State Sen. Mark Obenshain, R-Rockingham, speaks on the Senate floor, Tuesday, Feb. 17, 2026, in Richmond, Va., by Ryan M. Kelly/AP

RICHMOND, Va., March 11, 2026 (AP) — Nearly two decades ago, Virginia gave tech companies a tax break on equipment and software, and they began to build. The state became a data center hub, and they kept building. Residents bemoaned the noise while they built some more. Artificial intelligence boomed, and the power grid strained — still, more building.

Now, amid a growing national pushback on data centers, Virginia senators have voted to end a projected $1.6 billion annual tax break, requiring the industry to resume paying a minimum 5.3% sales tax. The proposal has left some opponents warning that it would bring construction of data centers in Virginia to a screeching halt.

“We have now left the ‘NIMBY’ phase: Not In My Backyard,” Republican state Sen. Mark Obenshain said last month. “And we've entered the ‘banana’ phase: Build Absolutely Nothing Anywhere Near Anything.”

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Illinois Data Center Virginia Mark Obenshain Data Center Coalition GWU Abigail Spanberger Katie Hobbs Arizona Energy Brian Kemp Georgia Dorian Hargrave AP JB Pritzker