North Carolina Ends Data-Center Power Tax Break as Other States Reassess Incentives

Key Facts

Some US states are scaling back parts of their data-center incentives or reassessing them, but the measures differ in scope and legal status. North Carolina repealed its sales-and-use-tax exemption for eligible electricity consumed by data centers effective July 7, 2026, with the repeal applying to the first eligible billing period starting on or after August 6, 2026. In New York, a bill to repeal exemptions covering data-center property and related services was referred to the Ways and Means Committee on February 12, 2026, and has not become law.

The shift also reached Ohio, which paused awards to new applicants while lawmakers review the program. The state reported that the exemption cost $554 million in 2024 and nearly $1.6 billion in 2025. The earlier projection for fiscal 2025 was $136 million, and the projection for fiscal 2026 was $142 million.

Incentives vary by state and can cover construction materials, computer equipment and electricity, as well as property-tax relief. A Virginia legislative review found that the state's data-center retail sales-and-use-tax exemption provided $928 million of tax relief in fiscal 2023 and was used by 90% of the industry.

The policy reassessment is not limited to forgone tax revenue. In Illinois, a pause on new awards starting July 1 was tied to concerns over electricity bills, water use and pollution, illustrating how grid and local-resource costs have become part of the incentive debate.

For operators and investors, the financial effect depends on the tax base involved. Removing an electricity exemption raises direct operating costs for eligible facilities, while ending exemptions for equipment and services primarily affects construction and expansion costs. Eligibility rules and protections for existing agreements also determine whether the impact falls on an operating facility or only on a new project.

In the market, Amazon (AMZN) closed at $256.97 and Alphabet (GOOGL) at $338.36 on September 8, 2026. Their daily lows were $254.75 and $333.22, respectively, but that price snapshot does not establish that trading was driven by data-center tax policy, nor does it automatically make those lows technical-support levels.

The next step is to monitor final statutory language, effective dates and grandfathering rules in each state. North Carolina's electricity tax is already due for covered billing periods, while New York's proposal remains in committee; proposed reviews and effective repeals should therefore not be treated as a single nationwide policy.