Marketplace Tech How states are competing in the data center gold rush
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Dec 16, 2025 Nicholas Miller, a policy associate at the National Conference of State Legislatures, dives into the fierce competition among states for data center investments. He reveals how 37 states offer tax incentives—ranging from property abatements to electricity exemptions—to attract these massive facilities. Miller discusses key regions thriving in this rush and the job promises tied to these incentives. He also highlights concerns about ROI and evolving energy regulations that could shape the future of data centers across the country.
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States Waging A Data Center Arms Race
- Thirty-seven states offer sales and use tax incentives to attract data centers, sometimes including electricity exemptions.
- These incentives predated AI but have intensified as hyperscale facilities drive massive spending and competition.
Upfront Tax Breaks Drive Location Choices
- Sales-tax exemptions for construction and equipment plus electricity waivers are the most valuable incentives to data center builders.
- States like Virginia, Texas and California host the most centers, while others chase them with workforce or grant strategies.
Construction Boom, Slim Permanent Payroll
- Data centers create many construction jobs but only a small number of permanent operational roles, often 20 to 50 employees.
- Long-term fiscal benefits often come from large property tax contributions when taxes are not abated.