A wave of US states are revoking tax breaks for data centers, putting pressure on the cost of large-scale AI infrastructure construction for tech giants. Four states have already canceled or suspended data center tax incentives, and another nine states are studying similar policies. This move could increase equipment procurement costs for a single 1GW-class AI data center by approximately $3 billion due to increased sales tax, and has already begun to impact financing terms for some data center projects.

The reason for the policy shift is that, as AI investment continues to heat up, state governments believe that tax incentives are eroding fiscal revenue, and that tech companies would not easily abandon local investments even without the incentives. Texas Governor Greg Abbott has asked the state legislature to study canceling sales tax exemptions for data centers. Washington and Arizona have canceled or suspended some exemptions, Louisiana has raised the threshold for benefits, and Virginia has switched to levying an electricity consumption tax, which is expected to add about $600 million in annual tax burden.