Virginia data center tax incentives nearly doubled last year, report finds

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Since 2010, data centers in Virginia have not had to pay the state’s sales and use tax. At a rate of 4.3%, that foregone revenue adds up: Over the past decade, data centers have been exempt from paying $2.7 billion.

The state lost out on $1 billion through the data center exemption in fiscal 2024, up from $685 million in fiscal 2023.

That’s according to the Joint Legislative Audit and Review Commission, which compiles an annual report on state spending for economic incentive programs. Those economic incentives are designed to encourage businesses to locate or expand operations in Virginia and include measures such as grants, tax credits and exemptions, business loans and gap financing.

The data center exemption constitutes most of the econ