Virginia built the world’s densest cluster of data centers on cheap power and generous tax breaks. Now it’s charging them for the electricity.
Governor Abigail Spanberger signed the state’s 2026 biennial budget on June 30, creating a data center electricity consumption tax of $0.011 per kilowatt-hour on all power used by data centers starting July 1. Budget analysts peg the take at about $600 million a year for the general fund.
What the Data Center Power Tax Does
The charge applies to electricity from utilities, competitive retail suppliers and self-generated behind-the-meter sources, so on-site gas turbines don’t dodge it. Collections above $600 million in a year get parked in a special fund and refunded to operators in proportion to what they paid. The tax sunsets July 1, 2028, and lawmakers left the existing sales-tax exemption on data center equipment in place.
Why Virginia Moved Now
Loudoun County alone routes a large share of the world’s internet traffic, and AI-driven load growth has utilities planning billions in new generation and transmission. Residents have pushed back on higher bills and on substations creeping toward neighborhoods. A per-kilowatt-hour charge ties the state’s cut directly to how much power the industry pulls, which is the number that’s actually climbing.
What It Means for Data Center Construction
An extra 1.1 cents per kWh won’t stop a hyperscaler, but it nudges the math on where the next campus lands, and it hands other states a template. Developers planning gigawatt-scale sites like the Stratos hyperscale campus in Utah and Meta’s Prometheus supercluster in Ohio already weigh power price and policy as heavily as land. Virginia is betting its fiber, talent and existing cluster are sticky enough to absorb the charge. The refund cap and 2028 sunset suggest even lawmakers aren’t sure how hard to push.