Virginia Lawmakers Reach Budget Deal Including Data Center Electricity Tax
Virginia lawmakers reached a budget deal that maintains existing tax incentives for data centers until 2035. However, the agreement introduces a new tax on the electricity consumed by data centers, capped at $600 million annually. Additionally, the budget includes provisions for new regulations concerning data center noise and cooling water scarcity.
Virginia's General Assembly reached a budget deal after months of negotiation, which includes significant provisions for data centers. The compromise maintains the controversial tax incentives for data centers, originally set to expire in 2035, but introduces a new tax on the electricity they consume. This new tax is capped at $600 million annually, with any collected revenue exceeding that amount to be refunded proportionally at the end of the fiscal year.
The budget agreement comes after Senate Finance Chair Louise Lucas, D-Portsmouth, advocated for an earlier elimination of data center tax breaks, a proposal that faced pushback from the Governor and House leaders concerned about business trust. Despite this, the deal was reached 12 days before the start of the new budget year. The 68-page summary of the deal also outlines new regulatory language regarding data center noise and cooling water scarcity, indicating upcoming restrictions for the industry in Virginia.
Beyond data center provisions, the budget also allocates funds for projects like an inland port in Washington County, expansion of the Virginia Tech Carilion School of Medicine in Roanoke, and a formal partnership between George Mason University and Averett University. Several other local infrastructure, education, and housing initiatives across the Commonwealth are also funded.