Eliminating or Reducing Data Center Subsidy Benefits all Virginians
WARRENTON, Va. (March 10, 2026) – The Piedmont Environmental Council (PEC) supports eliminating, or substantially limiting the sales tax credit on data center equipment, to increase revenues available to make life more affordable for Virginia’s families.
In a recent letter to General Assembly leadership and budget conferees, PEC makes the case that the more than $1.9 Billion generated from eliminating the sales tax would be better served by investing in critical water supply and wastewater treatment; transportation and transit; schools; childcare; and food security.
“As we’ve said all along, Virginia’s families should not be subsidizing the richest companies in the world. This tax exemption should be eliminated or phased out to support programs for people, not the profits of Amazon, Google, Meta and others,” says Chris Miller, President of The Piedmont Environmental Council.
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.
The Tax Exemption Worked, But it Doesn’t Make Economic Sense Anymore
The tax exemption began in 2008 to attract economic development to the state. Given that Virginia is the data center capital of the world, the incentive worked. The problem Virginia faces now is that we don’t have the infrastructure to support what’s already here – and what’s in the development process.
“The grid is being overwhelmed, air quality is increasingly degraded, and water resources are projected to be depleted to unprecedented levels. And these negative factors are based on current data centers and will only be amplified if we continue to blindly attract more without counting the real costs to the citizens of the Commonwealth,” said Miller.
Virginia is not alone in recognizing the need to rein in data center development and protect our citizens from the economic and environmental impacts of unconstrained growth. Among other states, Georgia and Arizona are actively taking steps to either eliminate or reduce their tax incentives, while Vermont, Oklahoma, Maryland, Georgia, and New York are calling for moratoriums on data center development.
While the General Assembly Debates, the Unconstrained Data Center Onslaught Continues
Dominion Energy recently told investors it is receiving requests to provide an additional 10 data center applications monthly totaling 2-3GW. This brings the cumulative demand to 70 GW: three times the highest peak electrical demand ever recorded in Virginia. Even now Dominion is struggling to meet peak demand of 24 GW and has to import more than 36% from other states.
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. This $100 billion, including nearly $30 billion for new and expanded transmission lines, is only necessary because of data centers: other electricity demand has been nearly flat for two decades.
Data centers should pay not only for the infrastructure being built for their use, but also pay their fair share of taxes to maintain critical state investments that will make life more healthy and affordable for families.
“Data centers need to pay their fair share of taxes in order to maintain critical investments that will make life more affordable for families. Eliminating or reducing the sales tax exemption on data center equipment is an important first step,” said Miller.
Media Contact: Mike Doble, [email protected]; 703-579-7963
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The Piedmont Environmental Council works to protect and restore the lands and waters of the Virginia Piedmont, while building stronger, more sustainable communities. Founded in 1972, PEC is a locally based, community-supported 501(c)3 nonprofit and accredited land trust. At the core of PEC’s approach is a focus on educating, engaging and empowering people to effect positive change in their communities.