Nevada lawmakers could hit pause on data centers, end their tax breaks

Nevada lawmakers are poised to consider a significant bill in 2027 that would eliminate the state's tax abatements for AI data centers and impose a statewide pause on new facility construction and expansion. The interim standing committee on revenue, chaired by Sen. Dina Neal, D-North Las Vegas, voted 6-2 to draft the bill, citing concerns about water usage, energy demands, and environmental impact across the state. This legislative move comes amidst broader community worries and follows local regulations such as Nye County's ban on data centers in a specific hydrographic basin and Clark County's moratorium on evaporative cooling systems.

The proposed legislation would amend Nevada's current data center tax abatement program, which offers developers a 75 percent abatement on personal property taxes for 10 or 20 years. While Democratic gubernatorial candidate Aaron Ford has pledged to end these tax breaks, incumbent Gov. Joe Lombardo, a Republican, has been generally supportive of data centers but is evaluating community impacts.

Opposition to the bill's current form emerged from Assemblymembers Lisa Cole and Jason Patchett, Republicans from Clark County, and Storey County Commissioner Clay Mitchell. They argue against an outright revocation of abatements and a pause on approvals, instead advocating for legislation that would help counties negotiate development agreements and modernize the abatement structure to reflect the state's needs while addressing water and power concerns. Mitchell highlighted the significant economic benefits, including high-paying union trade jobs, at the Tahoe-Reno Industrial Center in Storey County, which hosts a large concentration of the state's data centers.