Data center tax breaks retained
The Virginia General Assembly is nearing its budget deadline, with the House and Senate unable to agree on environmental standards for data center tax breaks. The House Appropriations Committee proposed retaining the sales and use tax exemption for data centers without requiring environmental standards, instead calling for a commission to conduct a comprehensive study on data centers due November 1. These tax exemptions save data centers approximately $1.6 billion annually.
As the June 30 budget deadline approaches, the Virginia House of Delegates and Senate remain at an impasse regarding tax breaks for data centers. The contentious issue revolves around whether data centers should meet environmental standards to qualify for the state's 5.3 percent sales and use tax exemption.
The House Appropriations Committee on June 12 presented a budget conference proposal that does not mandate data centers meet environmental standards for the exemption. Instead, it proposes the establishment of a commission tasked with conducting a comprehensive study on data centers, with a final report due by November 1.
This sales tax exemption significantly benefits data centers, saving them an estimated $1.6 billion annually, primarily on equipment replacement and upgrades. House Speaker Don Scott (D-Portsmouth) has publicly supported the tax breaks, citing the local tax revenue generated by data centers and the union jobs created during their construction. He has urged the Senate to endorse the proposed budget compromise.