Kentucky Gov. Andy Beshear calls for ending state tax incentives for data centers
Kentucky Governor Andy Beshear is advocating for the repeal of statewide tax incentives for data centers, arguing that the wealthy companies involved do not require state financial assistance. Lawmakers are considering rolling back these tax breaks in the upcoming legislative session, citing bipartisan criticism and potential revenue losses. This discussion is part of a broader trend where other states are also reconsidering data center incentives and moratoriums.
Kentucky Governor Andy Beshear has publicly called for the repeal of state tax incentives for data centers, arguing that the wealthy companies involved do not require financial assistance from the state. These incentives, initially passed in 2024 for Jefferson County and expanded statewide in 2025, offer massive sales and use tax exemptions for up to 50 years on computer equipment. Beshear's stance echoes bipartisan criticism and follows a report from the Kentucky Center for Economic Policy, a left-leaning think tank, which projected over $2 billion in lost sales tax revenue if just four proposed data centers are built under the current incentive structure.
Lawmakers, including Republican Senator Robby Mills and Representative Timmy Truett, have also indicated that the tax breaks may be rolled back or substantially reduced when the General Assembly reconvenes in January. Mills initially suggested reducing the exemption period or eliminating it, noting that "speed to market" might be more valuable than tax incentives for data centers, though he later emphasized ongoing discussions to "get the policy right." Truett explicitly endorsed repealing the incentives and expects legislation to be proposed.
Additionally, Truett praised Beshear’s recent executive order requiring data center companies to bear their own electricity costs, and highlighted a bill from the 2026 session, HB 593, which aimed to prevent data centers from passing electricity costs to other ratepayers. While HB 593 passed the House, it was halted in the Senate due to skepticism from GOP Senate President Robert Stivers, who called for a more comprehensive discussion with the governor to set policy parameters. Beshear, in turn, stated that Stivers had not communicated with him about a special session, which typically requires a prior agreement. The debate underscores a growing trend among states like Ohio, Arizona, Nebraska, Illinois, Texas, and New York, which are reconsidering or pausing data center tax incentives due to revenue concerns and public opposition.