By Jasmine Laws
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
Across the U.S., states are rethinking the deals they once offered data centers.
The often vast complexes are increasingly being treated as critical infrastructure in the U.S. race to dominate artificial intelligence, with the Trump administration casting faster buildout as essential to staying ahead of rivals such as China.
But that national urgency is colliding with a very different reality in state legislatures across the country, where lawmakers are grappling with the industry’s demands on power grids, water supplies and household utility bills.
Read More on News
The result is a patchwork response. Some states are still rolling out tax breaks and other incentives to attract data centers and the jobs and investment they promise, while others are imposing new guardrails, scaling back exemptions or even weighing moratoriums. Newsweek reviewed how every state is approaching the boom.
Alabama
In Alabama, lawmakers have proposed S.B. 270, which would require the Public Service Commission to ensure any large data center (those that consume 150-plus megawatts of power) fully pays for its added grid service costs, protecting regular ratepayers.
Though while the state is looking to protect ratepayers, it is also looking to increase development interest in Alabama—with Meta’s Montgomery facility in operation and a potential multi-building campus proposed in Bessemer.
Alaska
Alaska does not have a clear policy on data centers, though there has been discussion among lawmakers about how to ensure data centers truly benefit Alaskans.
Arizona
Historically, Arizona offers tax exemptions in the hope of encouraging data center operation and expansion in the state, and does not seem to have eyed up tighter regulation in this legislative session.
Arkansas
In 2025, lawmakers in Arkansas proposed H.B.1444, which would cut the investment threshold from sales tax exemptions from $500 million to $100 million and explicitly excluded crypto mining from qualifying as data centers.
The aim was to attract legitimate data center projects with easier eligibility for tax breaks while avoiding subsidizing energy-intensive crypto operations. The bill passed later that year, becoming Act 548.
California
Two bills are under review in the state. SB 886 would require the California Public Utilities Commission to establish a special tariff to protect ratepayers from the transmission costs that supply large data centers while meeting the state’s climate goals.
Meanwhile, SB 887 would require data centers to meet strict criteria for water conservation and clean energy use and would reward those who meet the criteria by potentially granting them an accelerated environmental review process.
Colorado
This month, Colorado lawmakers dropped legislation that would have required data centers to ensure they make progress toward generating enough renewable energy to produce 100 percent of their annual electricity consumption. Another bill, which would have offered incentives to data centers, also failed to win support.
Connecticut
In 2021, a law was passed in Connecticut that offered tax incentives to data centers to encourage development in the state. However, Governor Ned Lamont this year expressed concern over the growth of the data center industry.
Delaware
There does not appear to be any major state-level initiatives specifically addressing data centers in Delaware in the current legislative session.
Florida
Florida recently signed into law S.B. 484, which established protections for ratepayers and local communities against the costs and resources demands of large data centers.
Georgia
In Georgia, the state has been considering a number of bills that would tighten regulation of data centers, such as by eliminating the sales tax exemption. A bill has even been put forward that would implement the first statewide moratorium on new data centers in America.
Hawaii
There does not seem to be any major state-level initiatives specifically addressing data centers in Hawaii in the current legislative session.
Idaho
Idaho offers tax exemptions to new data centers choosing to locate in the state, although it is considering legislation that would restrict new data centers from using water for system cooling unless the water is supplied by a municipal or similar public system. Concerns about the huge amount of water that data centers consume have amplified nationwide.
Illinois
Illinois also offers new data centers a series of incentives to encourage expansion in the state, but it is also considering legislation that would establish environmental, water and energy regulations for new centers, such as requiring them to pay for their own energy costs.
Indiana
Lawmakers in Indiana this year put forward legislation—S.B. 79—that would require the state's utility regulatory commission to establish a working group to monitor and estimate the electricity demands of the data center industry and require data centers to submit quarterly reports on electricity use.
It also would require any new data centers to disclose projected water and power usage estimates ahead of construction.
Iowa
Like other states, Iowa continues to offer tax incentives for new data centers with the aim of expanding the industry, but it is looking into legislation that would require centers to report on their energy and water usage.
Kansas
Kansas last year passed legislation to expand data center development in the state by implementing tax exemptions.
Kentucky
Lawmakers in Kentucky were set to pass legislation that would have made data centers cover their own electricity costs, forcing them into contracts with suppliers, but the bill stalled in the Senate.
Louisiana
Louisiana has been actively trying to encourage data center development in the state, offering tax breaks and other incentives.
Maine
This year, Maine passed H.B. 713 to exclude data centers from certain tax exemptions, such as the business tax break programs.
Maryland
Maryland has had a busy legislative session for data center bills. According to its General Assembly website, 17 have been put forward, with only two passed. The bills incentivized data centers to produce their own renewable energy while also paying for any grid updates that they need.
The state continues to offer tax exemptions for new data centers, though, so the new guardrails are not to deter further development of the industry.
Massachusetts
Massachusetts continues to offer tax exemptions for new data centers and does not appear to have sought to pass any laws in this legislative session that would tighten regulation and requirements of the centers.
Michigan
Michigan passed legislation last year to ensure that data centers sign long-term contracts with electricity suppliers, covering their own energy costs. It also, in 2025, passed legislation to grant tax exemptions for data centers in an effort to encourage growth, but now with regulation.
Minnesota
Minnesota also has tax exemptions in place for new data centers—though it ended exemptions for electricity consumption in 2025—but like many others, it is also clamping down on regulation, with a number of bills under review that would seek to increase transparency, require a full environmental impact study to be conducted as well as other guardrails.
Mississippi
Tax exemptions for certain eligible data centers are also in place in Mississippi, and it does not seem to be looking to tighten regulation of the centers during this legislative session.
Missouri
Missouri has passed legislation requiring data centers to cover their own electricity costs, ensuring everyday utility customers are not impacted, but continues to encourage development of the industry with tax exemptions.
Montana
Montana has passed legislation to increase tax rates on data center properties across the state, though in this legislative session there does not seem to have been any further policies proposed.
Nebraska
Nebraska has also sought to bring in similar requirements for data centers, such as that they will have to pay for their own electricity costs and enter into contracts with suppliers.
Nevada
Nevada advanced a bill that would ensure large data centers have to enter into long-term contracts with electricity suppliers, to become accountable for their own energy usage, though it continues to incentivize the development of new centers.
New Hampshire
In New Hampshire, legislation is pending that would prevent local areas from regulating data centers more rigidly than other enterprises and would also make data centers a permitted land use by right in industrial zones.
New Jersey
New Jersey Governor Mikie Sherrill recently posted on X that the state has developed a four-point plan to ensure that the balance between innovation and guardrails is effectively handled. The guardrails outlined in the plan include that data centers must “bring their own power,” invest in the grid, report on their water use and a number of others.
New Mexico
Lawmakers in New Mexico have been debating legislation that would require data centers to track their energy use and provide an annual report on consumption. It would also stop utility companies from raising costs for ratepayers to cover usage of data centers.
New York
New York is considering legislation that seeks to halt large data center development in the state while it reassesses impacts on the environment and energy by pausing permits for centers using 20 megawatts or more of electricity.
North Carolina
Like a number of other states, North Carolina is looking to bring in guardrails for large data centers, with H.B.1063, which would make the centers disclose their electricity usage and water consumption, while also making centers exceeding certain levels of water and energy consumption produce at least 25 percent of their power from carbon-neutral sources.
North Dakota
North Dakota previously sought to tighten the regulation of data centers with unsuccessful bills, but in this legislative session does not appear to have implemented any guardrails.
Ohio
Ohio Governor Mike DeWine recently posted on X that he directed the chair of the Ohio Tax Credit Authority to “pause consideration of any new data center tax exemption requests while the Ohio General Assembly's Joint Data Center Committee studies the growth of data centers in Ohio.”
Oklahoma
This month, Oklahoma passed legislation that will bring in new protections for ratepayers in the state, enforcing data center accountability in regard to energy costs, and it is also reviewing a bill that would bring in a three-year moratorium on new data center projects while the Oklahoma Corporation Commission reviews their potential impact.
Oregon
In Oregon, legislation has passed that directs the Public Utility Commission to provide a classification of service for large energy use facilities—to determine right, obligations and tax treatment—and requires the commission to report each even-numbered year how energy trends have been affected by large data centers, as well as any other implications.
Pennsylvania
Pennsylvania Governor Josh Shapiro recently wrote on X that the state had implemented guardrails for data centers, including that they now have to pay for their own power generation, create at least 250 new jobs, and commit to minimizing air pollution and water consumption.
Rhode Island
Developers have been eyeing Rhode Island for a large data center project while the state considers various bills on either side of the data center debate, with some legislation seeking to bring in tax incentives for data centers and other legislation hoping to bring in guardrails.
South Carolina
There are three bills pending in South Carolina that would alter regulation for data centers—S.B. 725, 867 and 902. Each has a shared interest in tightening regulation for data centers, forcing them to report on water use and establish permitting requirements.
South Dakota
South Dakota has implemented new guardrails for data centers after previous bills that sought to bring in tax incentives for the centers failed. The guardrails include ensuring that the centers are covering their own electricity costs and reviewing their water consumption, as well as other measures.
Tennessee
Several bills in Tennessee were put forward this year to tighten regulation of data centers, but the only one passed states that data centers must pay for infrastructure upgrades needed to provide the electricity they require. It also continues to offer tax breaks for new centers.
Texas
Texas historically grants big data centers a state sales tax exemption on equipment, helping make it an industry hub. However, Texas has also enacted S.B. 6, which introduced tough requirements for certain data centers (those that consume 75 or more megawatts of power).
Utah
In Utah, a plan has been approved to develop one of the world’s largest data centers—more than twice the size of Manhattan—which has provoked significant backlash. The state has appeared to roll back pre-existing requirements for permits, though it has also established a framework of how these centers can obtain the electricity they need.
Vermont
Vermont Governor Phil Scott recently vetoed legislation in the state that would have tightened regulations for data centers, saying that existing guardrails—covering environment impacts and energy use rules—were sufficient.
Virginia
Senators in the state have been discussing ending tax breaks for large data centers in the state, exemptions that have been in place for nearly two decades.
Washington
Washington has been considering legislation to protect the grid and offset potential cost hikes for ratepayers as a result of data center development, but the legislation recently failed in the Senate. It has though passed legislation to narrow tax breaks for large data centers.
West Virginia
A 2025 law in West Virginia created special microgrid districts that allow data centers to generate their own power. A 2026 proposal would have added some guardrails—such as requiring projects to follow existing environmental laws and disclose potential harms—but lawmakers rejected stronger requirements on water use, transparency and local control.
Wisconsin
A number of bills have been reviewed in Wisconsin covering regulation from all angles—everything from utility costs to environmental impacts—though none of the legislation was successful, leaving it without a clear policy on the issue. The Milwaukee suburb of Port Washington, though, passed the nation’s first anti-data center referendum, requiring any future project to require the approval of voters before going ahead.
Wyoming
While lawmakers have said they will be looking into regulation of data centers in the state, there does not appear to have been much further action, leaving it without a clear policy on the issue.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines