Rural Data Centers Are in for a Big Federal Tax Break

Starting next year, rural land projects in the US will be eligible for specific corporate tax benefits, according to an expanded program. Jason Smith, chair of the Ways and Means Committee, stated that rural opportunity zones could make data center construction far more attractive. Experts, however, warn that the benefits may not necessarily lead to job creation or local economic growth.

Lawmakers proposed the opportunity zone program in the first Trump administration to offer tax benefits for projects in low-income census tracts. Last year, the One Big Beautiful Bill Act made changes to open up the program for rural investment. Research by Searchlight found that over 100 data centers in development could be eligible for these tax benefits, with the number possibly even larger as more urban data centers shift to rural areas.

While data centers in rural areas currently make up only 13 percent of operating facilities, 67 percent of planned data centers are going rural, according to Pew. However, some are concerned that the tax breaks could attract big tech companies and lead to mixed results for rural communities. Senator Josh Hawley introduced legislation to eliminate opportunity zone funding for data centers, claiming it would prevent Big Tech from receiving tax breaks for rural developments.

Companies such as Meta, Amazon, Microsoft, and Google have denied using the program, stating their site selection is based on factors other than tax benefits.