Hawley moves to strip some federal tax breaks from data centers
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Missouri U.S. Sen. Josh Hawley is targeting another financial incentive available to data centers, an issue that could have implications for projects being considered across the state.
He introduced the ‘No Tax Breaks for Data Centers Act’ on Thursday.
The bill would prevent data centers from qualifying for federal Opportunity Zone tax benefits, which are intended to encourage private investment in economically distressed communities.
Opportunity Zones allow investors to defer or reduce capital gains taxes by putting money into qualifying projects. Congress made the program permanent in 2025, with a new round of Opportunity Zone designations scheduled to begin in 2027.
Hawley argues large technology companies do not need the incentive to build data centers.
His legislation would specifically exclude data centers from the definitions of qualifying Opportunity Zone businesses and property while leaving the program intact for other eligible projects.
Research from the National Community Reinvestment Coalition found about 14% of existing U.S. data centers are located in Opportunity Zones.
That increases to 17.3% among projects that are approved, permitted or under construction.
The legislation comes as Joplin considers a massive potential data center development at Wildwood Ranch on the city’s west side.
However, the Wildwood property is not currently located in a federal Opportunity Zone, meaning Hawley’s proposal would not appear to affect that project under the existing Opportunity Zone map.
Missouri is currently working on new Opportunity Zone designations that will take effect in 2027.
There is another important distinction for Joplin: Hawley’s legislation would not eliminate Missouri’s separate Data Center Sales Tax Exemption Program.
Under Missouri law, a qualifying new data center can receive a 100% exemption from state and local sales and use taxes on certain construction materials, equipment, computers, utilities and other expenses for as long as 15 years.
Hawley’s proposal is part of a broader push involving data center costs.
He previously introduced bipartisan legislation with Sen. Richard Blumenthal of Connecticut aimed at preventing large data centers from shifting electricity infrastructure costs onto residential customers.
