Virginia passes first data centre power tax

Virginia lawmakers approved a $0.011 per kWh electricity consumption tax on data centres from 1 July 2026. The measure covers utility supply, competitive retail power, and self-generated electricity while preserving equipment tax relief. The signal is that large-load power use is becoming a policy exposure for AI-era infrastructure.

• Virginia's new data centre tax takes effect on 1 July 2026 and covers all electricity sources

• The tax shows how states are treating data centre electricity demand as a fiscal liability

The facts

Virginia lawmakers approved a budget bill establishing a new tax on data centre electricity consumption from 1 July 2026. The tax covers grid supply, competitive retail electricity, and self-generated power, including behind-the-meter generation. It is expected to raise $600 million annually, with annual revenue exceeding that threshold returned proportionally to operators. The bill preserves the equipment sales tax exemption but excludes data centres from certain large-consumer rate benefits. The exact per-kWh rate is not specified in publicly available sources.

The assessment

Virginia is not turning against data centres; it is making their electricity consumption more directly taxable. This matters because the state remains the leading US market for the sector, while testing a model that preserves investment incentives but captures more public revenue from electricity demand. The near-term effect is expected to be higher marginal project costs rather than market exit. The broader signal is that large-load power use is becoming a policy risk for AI-era infrastructure.

What to watch

The governor's decision, the Virginia State Corporation Commission rules within 60 days, and whether the tax shifts the economics of new projects or prompts other states to consider similar measures.