Virginia Democrats’ impasse over data centers could lead to first-ever partial government shutdown
Virginia Democrats are facing a standoff over data center tax incentives that could lead to a partial government shutdown if a budget agreement is not reached by the end of June. The state currently has a significant number of data centers, benefiting from tax exemptions that supporters argue are crucial for economic competitiveness. However, some lawmakers are advocating for the phasing out of these exemptions to reclaim lost revenue for public services.
- ▪Virginia leads the nation in data center development with 398 centers built and over 250 planned.
- ▪Democratic lawmakers are in a standoff over tax incentives for data centers, risking a government shutdown.
- ▪Senate Democrats propose phasing out the sales tax exemption for data center equipment starting January 1, 2027.
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Democratic lawmakers in Virginia are at an impasse over data center development, a standoff that could trigger a partial government shutdown if lawmakers fail to reach a budget agreement by the end of June. Virginia currently leads the nation in data center development with 398 centers built and more than 250 additional developments planned, according to Pew Research Center. The industry has flourished in large part because qualifying data centers are exempt from Virginia’s retail sales and use tax, allowing companies to purchase servers and other equipment tax-free.
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