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 levy starts 1 July 2026, targeting all power sources

• The tax signals how states are treating data centre power demand as a fiscal liability

The fact

Virginia lawmakers have approved budget legislation introducing a new levy on data centre electricity consumption from 1 July 2026. The tax covers utility supply, competitive retail power, and self-generated electricity, including behind-the-meter generation. It is projected to raise $600m annually, with excess annual collections above that threshold returned proportionally to operators. The bill keeps equipment sales tax relief but excludes data centres from certain large-load rate benefits. The exact per-kWh rate remains unclear in publicly available sources.

The Assessment

Virginia is not turning against data centres; it is making their power load more directly taxable. That matters because the state remains the industry's largest US hub while testing a model that preserves investment incentives but recovers more public revenue from electricity demand. The near-term effect is likely to be higher marginal project costs rather than a market exit. The wider signal is that large-load power use is becoming a policy risk for AI-era infrastructure.

What to Watch

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