The Center Square reports a new legislative review estimates that Virginia’s data center tax break generated 22 cents in state tax revenue for every dollar companies saved. Staff for the Joint Legislative Audit and Review Commission presented the findings Monday.
The report estimates that data centers saved an average of $811.5 million a year from fiscal 2021 through 2025. Researchers estimated that the business activity the tax break attracted generated $179.4 million a year in state taxes, leaving a difference of $632.1 million a year. The revenue estimate excludes local taxes, including property taxes that cities and counties collect from data centers.
The exemption lets qualifying data center operators and tenants buy computer equipment and software without paying sales and use tax. Five years of savings from that one tax break accounted for 60% of the $6.8 billion in tax breaks, grants and other business incentives the commission counted over a decade.
