House Democrats seek to block federal tax breaks for data centers

A growing coalition of House Democrats is pushing to strip federal tax incentives from the data center industry, arguing that massive server farms are gobbling up energy, straining local communities, and getting a sweetheart deal from the tax code in return. The effort takes direct aim at provisions in the Republican-backed “One Big Beautiful Bill Act,” including heightened Opportunity Zone tax credits that have become a magnet for data center developers. About 14% of existing US data centers and 17% of those planned or under construction sit inside Opportunity Zones, meaning they qualify for generous capital gains deferrals and exclusions originally designed to funnel investment into economically distressed areas. The Democratic campaign takes shape House Minority Leader Hakeem Jeffries and Rep. Jim McGovern have been leading the charge, spotlighting how tech giants are using tax provisions meant for community revitalization to subsidize warehouse-scale computing facilities. The push isn’t limited to the House. Sen. Ron Wyden released a white paper on August 6 advocating for the elimination of tax incentives for AI-related data centers entirely. His proposal goes beyond simply clo...