Legislature votes to eliminate $250 million in AI data center tax credits
The New Jersey Legislature has voted to eliminate $250 million in uncommitted tax credits for artificial intelligence and data center projects. The bill, which passed both houses with overwhelming bipartisan support, now heads to the governor's desk. Proponents argued that the state should prioritize taxpayers over large technology companies and address concerns about rising electricity bills and infrastructure strain.
The New Jersey Legislature has overwhelmingly approved a bill, S4390/A5165, to eliminate $250 million in uncommitted tax credits previously earmarked for artificial intelligence and data center construction projects. The measure passed the General Assembly by a 74-4 vote and the Senate with near-unanimous support, now advancing to Governor Phil Murphy's desk for signature. Assemblyman Andrew Macurdy (D-Summit), a key sponsor, lauded the bipartisan effort, emphasizing that AI data centers no longer represent the optimal use of state resources.
The legislation, formally known as the "End Data Center Tax Credits Act," diverts these funds to alternative economic development initiatives under the Next New Jersey Program. Assembly sponsor Balvir Singh (D-Burlington) articulated the rationale, stating that "wealthiest corporations and investors" backing AI data centers do not require additional state subsidies, especially when New Jersey residents are grappling with escalating costs for electricity and essentials. Singh advocated for prioritizing taxpayer relief and investments in reliable, affordable energy infrastructure over corporate enrichment.
This legislative action comes amidst growing contention surrounding data center development in New Jersey and across the nation. Policymakers are increasingly balancing the economic benefits of these facilities against significant concerns regarding their substantial electricity and water consumption, potential strain on local infrastructure, and impact on utility rates. The broad bipartisan consensus for the bill in New Jersey highlights the strong sentiment against further subsidies for data centers, fueled by local opposition and a desire to redirect public funds toward more pressing community needs.