Senator Introduced Act to Limit Data Center Tax Breaks
The proposed legislation targets Opportunity Zone incentives currently used to build data center facilities.
Updated on Sept. 21, 2026 in Data Centers
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Senator Josh Hawley has introduced the No Tax Breaks for Data Centers Act to prevent data center developers from utilizing federal tax incentives. The legislation aims to restrict eligibility for the Opportunity Zone program, which was originally established to drive investment into low-income communities.
Why it matters
The bill addresses the current use of community-focused tax breaks for industrial tech infrastructure, potentially altering the financial landscape for future data center construction. It seeks to ensure that tax relief remains directed toward its intended purpose of supporting distressed local economies.
Current data indicates that 14 percent to 17 percent of all U.S. data centers are located within designated opportunity zones. The proposed act seeks to amend the tax code to exclude these industrial facilities from the incentive program established in 2017.
The players
Josh Hawley
A U.S. Senator who introduced the No Tax Breaks for Data Centers Act.
The details
The Opportunity Zone program was designed to encourage long-term investment in low-income census tracts by providing tax advantages to investors. The proposed legislation would explicitly bar data centers from qualifying for these specific tax benefits. This change would require an amendment to the tax code to reclassify data center developments as ineligible projects for the program.
Timeline
Congress enacted the original Opportunity Zone program in 2017.
Senator Hawley introduced the new legislation in September 2026.
The Tech Race
This legislation places the rapid expansion of digital infrastructure in direct competition with the original economic development goals of the Opportunity Zone program. It highlights a growing tension between tax-subsidized industrial site selection and the revitalization of distressed communities.
Developers and companies planning new data center projects in opportunity zones will need to monitor the legislative progress of this bill to assess project feasibility and tax liability. If passed, the act would effectively increase the cost of capital for future site developments in these areas.
The takeaway
This act highlights the growing scrutiny over how specialized industrial technology projects utilize community development incentives. Stakeholders should track the floor debate and subsequent committee review to determine if the bill moves toward a formal vote.
Further reading
For more background on facility development, see Data Centers.
Source note: This article includes information reported by Institutional Real Estate, Inc..
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Should large technology companies be eligible for tax breaks intended to help low-income communities?
