Sen. Lucas Keeps Heat On To End Exemption for Data Centers

By Rosaland Tyler
Associate Editor
New Journal and Guide

Virginia Senate President Louise Lucas continues to oppose the nearly 20-year tax exemption that data centers received in 2008, arguing that these funds could be used to fund  public projects.

The tax exemption was first approved by the General Assembly in 2008 and implemented in 2010 to attract large-scale data center investment. The Virginia General Assembly officially adjourned on March 15 without approving a budget. An April 23 special session has been scheduled.

In plain terms, Lucas is objecting to tax exemptions that allow companies to avoid paying Virginia’s sales tax on computer equipment and software used in data centers. Lucas’ opponents object because they fear these data centers may leave the state, according to news reports. The same outlook is shared by some localities who benefit from other taxes paid by the industry. But Lucas considers these tax abatements — now running upwards of $1.9 billion a year — as nothing more than a giveaway.

The exemption isn’t set to expire until 2035, but the state Senate has proposed expiring it on Jan. 1, 2027 — eight years ahead of schedule.

“A lot of folks are saying [data centers are] gonna leave, go to other places, but I don’t believe that’s going to happen,” said Lucas, a Portsmouth legislator who chairs the Senate Finance Committee, speaking in recent news reports. “I think they’ll continue to build in Virginia, but I think they understand it’s going to be a different playing field right now.”

The American Edge Project reported in late 2025 that Virginia has more than 660 data centers in operation and nearly 600 more planned.

At a Senate Finance and Appropriations Committee meeting in February, Lucas, the committee chair said, “No one could have predicted this rapid growth, and it will only continue to grow exponentially alongside continued investments in artificial intelligence.”

“As data centers have expanded, Virginians have become increasingly concerned about subsidizing their energy demands and mitigating their environmental impacts,” Lucas said. “We’re asking data centers to pay their fair share in sales tax to help deliver our core services — education, transportation and social services. Investing in Virginia requires investing in the infrastructure that supports them.”

Lucas recently said on X, “Next year I’m going to help our House of Delegates members get on social media so they can keep up. As you know I’ve been saying for weeks now that we will not pass a budget that puts data centers’ tax breaks ahead of hard-working Virginia families and I am not backing down now.”

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Some groups are calling for the state to keep the state exemption, including a Danville-based economic development group. However, environmental and progressive groups have been vocal about eliminating or at least restricting the tax breaks.

“As we’ve said all along, Virginia’s families should not be subsidizing the richest companies in the world. This tax exemption should be eliminated or phased out to support programs for people, not the profits of Amazon, Google, Meta and others,” Chris Miller, president of The Piedmont Environmental Council, said in a recent statement.

Legislators recently convened without striking a budget deal but will meet soon.

Meanwhile, Cardinal News noted in a recent report, “The debate over a data center tax policy is key to whether House and Senate budget negotiators can come to terms on a budget. As one of those negotiators, state Sen. Creigh Deeds, D-Charlottesville, has pointed out several times, legislators can’t make a budget until they know how much money is available.”