How Much Revenue Do Data Centers Generate For Local Governments?

As Young County residents debate the merits of a proposed Stream Data Centers campus, one question continues to overshadow the discussion: How much revenue do data centers actually produce for taxpayers?

The answer varies widely across the country, depending on each state’s tax structure, whether local governments tax not only the buildings but the high-value servers and networking equipment inside them, and whether companies receive tax abatements or exemptions during construction. A review of financial reports and government analyses from the nation’s major data-center regions shows just how dramatically these policies affect local revenue.

In Virginia, the global epicenter of data center development, local governments have seen enormous fiscal gains because the state allows counties to tax business’ “personal property,” including servers, racks, cabling, and high-capacity cooling equipment. Data centers in Prince William County generated $166.4 million in local tax revenue in 2023, budget documents show. In neighboring Loudoun County, the world’s largest cluster of data centers, county reports show that the industry now provides nearly half of all property tax revenue, contributing an estimated $663 million in 2022. Loudoun’s fiscal impact statement estimates that data centers generate approximately $26 in tax revenue for every $1 in county services they require.

These figures illustrate the top end of the revenue spectrum—possible only where local tax policy captures the value of the equipment powering modern cloud computing.

In states where data- center operators receive extensive exemptions, revenue tends to be far smaller. Texas, for example, just approved state sales-tax exemptions of up to $125,000 for data center equipment purchases and allows counties to negotiate local abatements. As a result, revenue typically stems from real-property taxes alone, unless additional agreements—such as payments in lieu of taxes (PILOTs)—are negotiated. Depending on local appraisal values and tax rates, this can range from several hundred thousand dollars to a few million annually once a campus is fully built.

Smaller projects yield correspondingly smaller results. A $550 million Amazon data center approved in Warrenton, Virginia, for instance, was projected to produce about $900,000 per year in local revenue according to town records and planning documents.

Construction timelines also play a role: multi-building campuses typically develop over many years, and tax revenues grow as each building is completed and each wave of servers is installed. This means that even if a project eventually becomes a substantial revenue generator, early-phase contributions may be limited.

For Young County, where Stream has not yet filed a tax-abatement request and the full scope of the proposed development remains unknown, the potential financial impact is still unclear. The county’s revenue could fluctuate dramatically depending on how the project is valued, whether business personal property is included in the appraisal base, and what terms county commissioners ultimately approve.