// WIRED US/UK — FINANZA
Rural Data Centers Are in for a Big Federal Tax Break
Welcome back to Power Play! Each week, senior writer Molly Taft tackles a topic around this midterm season’s biggest issue: data centers. If you’ve got a question or thought for the column, feel free to shoot Molly an email at [email protected] or reach them securely on Signal at mollytaft.76.
On January 1, a new tax windfall will kick in that could benefit scores of rural data center projects—all thanks to the One Big Beautiful Bill Act.
Starting next year, projects sited in tracts of rural land across the country will be newly eligible for a set of specific corporate tax benefits under a program expanded by the bill. The new rules “may significantly lower barriers for large-scale, capital-intensive projects in rural areas—most notably hyperscale data centers,” said a statement from Ways and Means Committee chair Jason Smith last year. “The economic case for building data centers in designated rural opportunity zones becomes far more compelling” with the new program, he continued.
But experts warn that the results for rural communities could be mixed.
“Right now, the only requirement to get the benefits is capital investment,” says Emily Kraschel, a tax policy analyst at the Searchlight Institute, a public policy think tank. “However, that doesn't guarantee that that money is necessarily creating jobs or creating a local economic boost. You'd be more sure of that with a more traditional factory that requires lots of workers. But with a data center, that assumption goes a little wonky.”
During the first Trump administration, a bipartisan group of lawmakers proposed the creation of the opportunity zone program, which offers tax benefits for companies that choose to build projects in certain low-income census tracts. Last year, the One Big Beautiful Bill Act made a number of changes to open up the program in order to attract more investment to rural areas.
Kraschel and her colleagues from Searchlight have been researching data center projects that might qualify for these tax benefits, comparing the locations of data center projects in development with rural census tracts eligible for the new program. WIRED exclusively reviewed the research compiled by Searchlight and found more than 100 data centers under various stages of development in rural areas that could be eligible.
Searchlight used a very conservative database of under 700 data center projects that are planned or under construction to compile its research; other datasets put the number of data centers in development in the US at closer to 1,500. It’s very likely that the number of newly eligible projects is bigger, especially since more data centers are decamping from urban areas. Separate research from Pew found that while just 13 percent of operating data centers are located in rural areas, a majority of planned facilities—around 67 percent—are going rural.
Searchlight’s research comes as the backlash against data centers—including from rural and GOP voters—is reaching a fever pitch. Tax breaks for data centers being built by some of the most powerful companies in the world have become a flashpoint in these debates: Amazon recently made headlines for attempting to negotiate for a lower tax bill on one of dozens of data centers it plans to open in Mississippi, while The New York Times reported last week that Meta is writing off data center equipment under a federal tax break intended for research and experimentation.
In the scramble to try to regulate the industry, the opportunity zones aren’t going unnoticed. Last month, Senator Josh Hawley introduced legislation that would eliminate opportunity zone funding for data centers, claiming that he would help “ensure Big Tech companies don’t get tax breaks to build data centers on farmland.”