Virginia has a data center boon. Officials debate whether it’s time to scrap its tax breaks

RICHMOND, Va. (AP) — Virginia senators are pushing to curtail a 5.3% tax break for data centers. The policy proposal comes while many communities are trying to defeat data center projects in zoning proceedings and some states are reconsidering their sales tax exemptions. It is not guaranteed that Virginia will end up taxing data centers. The governor and other high-ranking lawmakers say they are concerned the tax would end industry investment in the state. Still, lawmakers’ campaign to end such tax exemptions has stirred bipartisan support. Officials negotiating the tax policy have until Saturday (March 14, 2026) to agree on and pass a budget.