Virginia's data center tax break cost $1.94B last year, and voters oppose it
The data center sales tax exemption cost Virginia and localities a reported $1.94 billion in fiscal 2025, and a VCU poll found 72% of voters oppose it. The 2027 General Assembly and county boards decide what changes.
Virginia's data center sales tax exemption cost the state and localities a reported $1.94 billion in fiscal 2025, up from $1.29 billion in fiscal 2024, according to the Department of Taxation. The report, dated Jan. 2, 2026, covers $33.2 billion of exempt equipment and software purchases in fiscal 2025. The figures are self-reported by operators and were not independently validated.
Staff for the Joint Subcommittee on Tax Policy put the benefit at $673.5 million in fiscal 2022, a 188% rise through fiscal 2025. The exemption is scheduled to expire July 1, 2035. The 2026 budget kept it and added a tax of $0.011 per kilowatt-hour on electricity consumed by data centers from July 1, 2026 until July 1, 2028, with up to $600 million a year going to the general fund. The subcommittee must report recommendations on the exemption to the General Assembly by Dec. 15.
Seventy-two percent of Virginia registered voters oppose giving data centers a sales tax exemption, according to the Summer 2026 Commonwealth Poll released July 15 by the VCU Wilder School. The poll found opposition across party lines: 73% of Democrats, 69% of Republicans and 61% of independents. The same poll found 81% of registered voters support requiring data centers to pay additional fees to offset their electricity demand.
On the federal side, Sen. Mark Warner (D-Va.) announced the Data Center Tax Accountability and Disclosure Act on July 21 as part of an AI legislative agenda. According to his office, the bill would require large AI data centers to publicly report their power and water use, emissions and backup generation, and would tie the federal bonus depreciation tax benefit for those facilities to efficiency and sustainability standards.
Local boards decide where projects are built. Loudoun County supervisors are scheduled to take up a resolution to pause consideration of data center and substation applications at their Nov. 17 business meeting, after the county deferred the item from Oct. 20, according to a county notice. Stafford County's Planning Commission is scheduled to hold hearings on four Kings Highway data center sites on Nov. 18. The General Assembly convenes in January 2027; see our 2027 Watch page for the data center bills we are tracking.
The tax break now costs Virginia nearly $2 billion a year and polling shows opposition across party lines. The General Assembly, which convenes in January 2027, and county boards set the rules.
What's next
- Nov. 17 Loudoun supervisors take up the data center pause resolution
- Nov. 18 Stafford County Planning Commission hearings on four Kings Highway data center sites
- Dec. 15 Joint Subcommittee on Tax Policy recommendations on the exemption due
- January 2027 General Assembly convenes
Sources
- Virginia Department of Taxation: Biennial Data Center Retail Sales and Use Tax Exemption Report (Jan. 2, 2026)
- Joint Subcommittee on Tax Policy staff overview (Aug. 19, 2026)
- 2026 Budget, HB30, item 3-5.24: data center electricity consumption tax
- VCU Wilder School: Commonwealth Poll on data center sales tax exemption (July 15, 2026)
- Sen. Warner: AI legislative agenda press release (July 21, 2026)
- Loudoun County: Board to defer discussion of proposed pause on some data center applications
How we source: sources and corrections.
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