Gov. Stein asks energy task force to consider overhaul or elimination of NC's data center tax breaks

North Carolina Governor Josh Stein has called upon the N.C. Energy Policy Task Force, which he established last year, to review and potentially eliminate or overhaul existing sales tax exemptions for data centers. The current state law grants data centers that invest at least $75 million within five years exemptions from sales and use tax on equipment and electricity. Governor Stein argued that these tax breaks, initially enacted in 2010 and widened in 2015, were designed to incentivize a nascent industry, but are no longer necessary given the "explosive growth" of data centers and the "trillions of dollars of capital flowing freely into data center construction." The N.C. Department of Commerce estimates that existing data centers are already avoiding $45 to $57 million in annual sales taxes. Projections indicate this could balloon to between $1.5 and $2.3 billion in construction taxes and an additional $450 million annually in operating taxes if 6.3 gigawatts of planned data centers come online in North Carolina. While more than 37 states offer similar exemptions, a bipartisan movement to repeal them is gaining traction nationwide, with Georgia's State Senate voting to repeal its exemption and Virginia's Senate including a sunset clause in its budget proposal. Rob Corradi, a government affairs official for Amazon, which plans a $10 billion data center in Richmond County, questioned the forum for this discussion and warned that repealing incentives could damage the state's business reputation, especially after companies have made commitments. Industry groups like the Data Center Coalition and Carolinas Industrial Group for Fair Utility Rates emphasize the economic benefits of data centers, including job creation and GDP contributions. Governor Stein has proposed either a full repeal, a sunset date, or tying eligibility for tax breaks to conditions such as the use of carbon-free energy or mandatory reporting of water and energy usage. State lawmakers, including Rep. Kyle Hall and Sen. Julie Mayfield, acknowledge the issue could merit General Assembly discussion, but some express concerns about the broader implications of rolling back tax exemptions for specific industries.