Senator Josh Hawley of Missouri plans to introduce legislation to exclude data centers from Opportunity Zone tax incentives. These tax breaks were established under the 2017 Tax Cuts and Jobs Act to encourage private investment in low-income areas.
Data from the National Community Reinvestment Coalition indicates that 14% of existing data centers are located in these zones. Furthermore, over 17% of all approved or permitted data center projects are situated within these designated areas.
On September 16, 2026, House Democrats introduced a separate bill targeting federal incentives for data centers. This follows Hawley's previous legislative efforts, including the co-sponsorship of the GRID Act, S. 3852, in February 2026.
The GRID Act proposes requiring new data centers to utilize off-grid power sources. Concerns have been raised that rising electricity demand from server farms leads to increased utility rates for local residents and small businesses.
Proposed changes could increase the after-tax costs for new data center projects, potentially leading to project delays or relocation. While existing investments may be protected from retroactive rules, new fund formation faces significant uncertainty.
