Pennsylvania’s Amazon data center boom is fueled by a lucrative tax break
Amazon is actively expanding its data center footprint across Pennsylvania, benefiting from a controversial state sales and use tax exemption. Despite a recent executive order by Governor Josh Shapiro aiming to regulate data center operations, legislative efforts to repeal the lucrative tax break have stalled. Public and environmental opposition continues to grow, with some specific data center projects facing local zoning denials.
Amazon is significantly expanding its data center presence across Pennsylvania, having pledged $20 billion for facilities supporting artificial intelligence. This expansion includes projects in Salem Township, Falls Township, and a proposed 4.5-gigawatt campus in Homer City, as well as sites in Hazle Township and Kline Township, and a prospective project in Montour County. The tech giant is currently benefiting from a state sales and use tax exemption on equipment, which critics project could cost Pennsylvania nearly $2 billion in revenue by 2031.
Legislators from both parties have attempted to repeal this tax exemption, with versions of bills passing in both the Democratic-controlled House and the Republican-controlled Senate. However, neither measure reached Democratic Governor Josh Shapiro's desk before the state budget was signed in July. Separately, Governor Shapiro issued an executive order in August that prohibits state officials from signing non-disclosure agreements with data center operators, mandates local community support, and incentivizes environmental standards and independent energy provision. Operators claiming the tax exemption must now adhere to these legally binding requirements, although critics like Megan McDonough, Pennsylvania state director at Food & Water Watch, argue for a full repeal of the subsidy.
The data center boom in Pennsylvania has made it a hotspot, with over 100 projects identified statewide. These facilities are heavy energy consumers, threatening to increase demand for natural gas and strain the power grid. Public opposition is intensifying, evidenced by a large rally at the state Capitol and local zoning denials for some Amazon-related projects, including a proposed site in Hazle Township and a rezoning request in Montour County. Environmental groups and grassroots coalitions, like Karen Feridun's Better Path Coalition, are prioritizing the repeal of the data center subsidy in the upcoming legislative session, despite the complexities of an election year.