The following text was taken from a letter sent to members of the General Assembly on March 6, 2026.

Dear Members of the General Assembly and Budget Conferees,

The Piedmont Environmental Council supports efforts to eliminate or substantially limit the sales tax credit on data center equipment as a means of increasing revenues available for need programs in Virginia. We know we need to make investments in the infrastructure and programs to support existing communities, including critical water supply, waste water treatment, transportation and transit, affordable housing, schools, child care, and food security.

The Senate proposal to eliminate the sales tax exemption for data center equipment would generate over $1B over the biennium to make life more affordable for hardworking Virginians and make needed investments in existing communities. What began in 2008 as a targeted incentive to attract economic development has exploded into a subsidy for a multi billion-dollar industry that has developed an expectation and growth strategy that inappropriately relies on extracting state tax incentives as a part of their business model. The cost to Virginians of this corporate tax giveaway has skyrocketed from a couple million dollars in 2008 to $1.9 billion in FY 2025, increasing by orders of magnitude. From another perspective, the $1.9 billion sales tax exemption is approximately 6% of total state revenues collected in the last fiscal year and could have increased state revenue from $31.2 billion to $33.1 billion if collected.

Already, Virginia is home to over 500 data centers—with many more applications, far surpassing the capacity of energy and water supply infrastructure available to support it. Dominion Energy has reported to investors that it is receiving requests to provide an additional 1-2 gigawatts for new data centers each month, with a current overall estimate of 70 GW of demand, more than three times the highest peak electrical demand ever recorded in Virginia. Virginia is already home to the largest concentration of data centers in the world and has more than 300 million square feet of applications in communities across the Commonwealth. Just to meet the backlog of demand over the next ten years, Dominion will need to invest over $100 billion in generation, transmission and substation infrastructure.

Data centers need to pay their fair share of taxes in order to maintain critical investments that will make life more affordable for families. And as we think about future opportunities to invest in transformative investments in Virginia, including water supply and waste water treatment infrastructure, transportation infrastructure and support of transit systems, and needed investments in schools, child care and affordable housing, we strongly encourage budget leaders to start with tax reform. Eliminating or reducing the sales tax exemption on data center equipment is an important first step.

Sincerely,

Christopher G. Miller
President
The Piedmont Environmental Council