Data center pros and cons for a community

Pro: tax revenue, at a scale small budgets notice

Virginia’s Joint Legislative Audit and Review Commission (JLARC) found data center revenue accounted for 31 percent of total local tax revenue in Loudoun County and 7 percent in Prince William County in FY2023[1]. Local government staff in both localities told JLARC the revenue has allowed them to lower real estate tax rates[1]. Loudoun County says the revenue has let it generally lower the real property tax rate for homeowners every year for the past decade, and that its rate is now the lowest in Northern Virginia[4].

The dollar figures are large where the industry is concentrated. Loudoun’s budget documents list data center computer equipment tax revenue rising from $466 million in FY2022 to $684 million in FY2024[5], and the county says data centers generated $1.2 billion in real and personal property tax revenue in FY2026, 39% of its overall budget[6]. Prince William County reported $293.7 million in data center tax revenue in tax year 2024, a 77% increase over the prior year[7].

Some communities also negotiate direct payments. In Lancaster, Pennsylvania, the developer side pledged $20 million in direct payments to local causes, split between an economic development fund and city sustainability efforts[8]. Microsoft has said it will not ask municipalities to reduce local property tax rates for its data centers (a company pledge)[9].

Con: what happens to electricity bills

This is the most contested question, and credible sources disagree. A 2025 study by Lawrence Berkeley National Laboratory and the Brattle Group found that state-level load growth has tended to depress retail electricity prices in recent years, by spreading fixed costs over more sales[10] — but the same study cautions the relationship need not hold, and that a higher-growth future can raise retail prices where new supply and delivery infrastructure is constrained and costly[10]. JLARC found Virginia’s current rates appropriately allocate costs to the customers responsible for them, including data centers[1], while estimating that a typical Dominion residential customer could see generation- and transmission-related costs rise by $14 to $37 a month in real dollars by 2040[1].

Wholesale capacity costs are a separate channel. PJM’s Independent Market Monitor calculated that including existing and forecast data center load raised capacity market revenues in the 2026/2027 auction by $7.3 billion, or 82.1 percent[11], and by a combined $23.1 billion across three auctions[11], concluding that data center load growth is the primary reason for recent and expected capacity market conditions, including high prices[11]. Maryland’s Office of People’s Counsel notes PJM approved over $5 billion in baseline transmission projects in 2023, including work driven by 7,500 MW of data center load growth in the Dominion and Allegheny zones[12].

Regulators have responded by writing rules that put more of the risk on large customers. AEP Ohio says large new data center customers must pay for a minimum of 85% of the energy they subscribe to use, even if they use less[13]; the utility says data centers had requested 30,000 MW of service before the tariff was approved[14]. Virginia’s SCC created a new rate class for customers over 25 MW with high load factors[15], and the Georgia PSC allowed Georgia Power to bill customers over 100 MW under special terms[3].

The jobs question

Construction employment is real but temporary; permanent employment is modest. JLARC reports that, per data center representatives, about 1,500 workers are on site at the height of construction of a data center building[2], while a typical 250,000-square-foot facility may have about 50 full-time workers once running[2]. Pay is high: JLARC says Virginia data center employees and contractors earn about $100,000 a year on average[1], and it estimated the industry supports 74,000 jobs and $9.1 billion in GDP statewide[2].

Where incentives are involved, states have measured the return. JLARC’s analysis found Virginia’s data center sales tax exemption returned 48 cents in state revenue per $1 spent[1], on $928 million in tax savings in FY23[2]. A December 2025 evaluation of Georgia’s exemption estimated 30% of data center activity in the state was attributable to the incentive, with 70% likely to have occurred anyway[16], projected an overall economic ROI of 186.3%[16], and Georgia’s auditors put forgone state tax revenue at $474.2 million in FY2025[17]. The Texas Tribune reported the comptroller’s office expects Texas to forgo $3.2 billion over two years under its data center exemption[18]. Industry-commissioned figures are much larger: a PwC study for the Data Center Coalition says the industry directly employed about 1 million people in 2024[19] and contributed $204 billion in total fiscal support to governments[19].

Land, noise, water and air

Data centers take land and build near homes. JLARC reported Virginia has over 63 million square feet of data center space on 7,200 acres[20]. On noise, JLARC found data centers emit low-frequency noise that is not loud enough to damage hearing and rarely violates ordinances, though its constant nature has been a problem near homes[20]. On water, JLARC found most data centers use about as much as a large office building or less, with a few using substantially more[1]. On air, nearly all current data centers use diesel backup generators[20], which JLARC calculated make up less than 4% of regional nitrogen oxide emissions in Northern Virginia[20]; Virginia has since begun requiring Tier 4-equivalent standards for new or modified generators[21]. See the health guide for what the research says about those emissions.

The risk communities are asked to weigh

Two cautions recur in the official record. First, the revenue may not grow forever: Loudoun County itself says data center personal property tax revenue will plateau at some point in the next five to 10 years, so it must keep budget growth sustainable[4]. Second, the demand may not arrive: JLARC warned that if forecast demand does not materialize or several large data centers close, utilities could overbuild generation and transmission and be left with costs recouped from existing customers[1]. An advocate quoted by the Georgia Recorder put the same point bluntly, saying customers would be left holding the bag if demand doesn’t show up or data centers fail to cover their costs (an advocacy claim)[22].

Projects can also fail late. Virginia Business reported in July 2026 that the Prince William Digital Gateway, a proposed 23-million-square-foot complex on 2,100 acres near Manassas National Battlefield Park, is dead after a legal battle of more than two years[23].

Common questions

What are the pros and cons of a data center?

The main pro is tax revenue: data centers accounted for 31 percent of Loudoun County, Virginia’s local tax revenue in FY2023. The main cons are electricity system costs, land use, noise near homes and limited permanent employment — a typical 250,000-square-foot facility has about 50 full-time workers.

Do data centers raise electricity bills?

Sources disagree. An LBNL/Brattle study found load growth has tended to lower retail prices recently by spreading fixed costs, while cautioning that costly new infrastructure can reverse that. Virginia’s JLARC estimated a typical Dominion residential customer could pay $14 to $37 more a month in real dollars by 2040, and PJM’s Market Monitor attributes billions in higher capacity costs to data center load.

How many jobs does a data center create?

About 1,500 workers are on site at peak construction of a data center building, per JLARC, while a typical 250,000-square-foot facility employs about 50 full-time staff once operating. Pay is high: about $100,000 a year on average in Virginia.

Are data centers good for a small town’s tax base?

They can be, but the revenue is concentrated and may plateau. Loudoun County says its data center personal property tax revenue will level off within five to 10 years, and JLARC warns utilities could be stranded with costs if forecast demand does not materialize.

Sources

1. Data Centers in Virginia (JLARC Report 598)
   Joint Legislative Audit and Review Commission (JLARC), Virginia General Assembly · 2024-12-09
   8 source excerpts

   “Loudoun and Prince William have the largest and most mature markets, and data center revenue accounted for 31 percent and 7 percent, respectively, of total local tax revenue (Figure 2-4).”

   “A typical residential customer of Dominion Energy could experience generation- and transmission-related costs increasing by an estimated $14 to $37 monthly in constant (or real) dollars by 2040 (independent of inflation).”

   “One risk is that utilities will build more generation and transmission infrastructure than is needed if forecast demand does not materialize, or several large data centers close. This could strand utilities with infrastructure costs that would have to be recouped from their existing customer base.”

   “Local government staff indicated data center revenue has allowed their locality to lower real estate tax rates (Loudoun and Prince William),”

   “The study found that current rates appropriately allocate costs to the customers responsible for incurring them, including data center customers.”

   “On average, data center employees and contractors earn about $100,000 per year, varying based on job role and area of the state.”

   “Return in revenue per $1 spent 48¢ ... Jobs added 84 jobs [data center exemption] ... Jobs added 58 jobs [average Virginia incentive]”

   “Most data centers use about the same amount of water or less as an average large office building, although a few require substantially more, and some require less than a typical household.”

2. Data Centers in Virginia (Report Summary)
   Joint Legislative Audit and Review Commission (JLARC), Virginia General Assembly · 2024-12-09
   4 source excerpts

   “Data center jobs tend to be high paying. Several data center representatives indicated that a typical 250,000-square-foot data center may have approximately 50 full-time workers, about half of which are contract workers.”

   “Construction of an individual data center building usually takes about 12 to 18 months, and data center representatives indicated that, at the height of construction, approximately 1,500 workers are on site from various construction-related industries.”

   “Overall, the data center industry is estimated to contribute 74,000 jobs, $5.5 billion in labor income, and $9.1 billion in GDP to Virginia's economy annually. ... Most of these economic benefits derive from the construction phase rather than data centers' ongoing operations.”

   “the exemption is valuable to the industry (providing $928 million in tax savings in FY23)”

3. PSC Approves Rule to Allow New Power Usage Terms for Data Centers (media advisory)
   Georgia Public Service Commission · 2025-01-23
   Source excerpt

   “The new Georgia Power rule states that any new customers using more than 100 megawatts of energy can be billed using terms and conditions beyond those used for standard customers to address risks associated with these large-load users.”

4. Data Centers: Tax Revenues & County Budget
   Loudoun County, Virginia · 2026
   2 source excerpts

   “The revenue has enabled the county to generally lower the real property tax rate for homeowners every year for the past decade; the current real property tax rate is the lowest in northern Virginia.”

   “One challenge with managing the vast increase in revenue generated by data centers is that the county must limit the growth in its budget to a level that is sustainable over time and in recognition that the growth of data center personal property tax revenues will plateau in the next five to 10 years at some future point.”

5. FY 2026 Proposed Budget: General Fund Revenue and Trends
   Loudoun County, Virginia · 2025-02
   Source excerpt

   “Comp. Equip. Data Centers 466,183,383 581,550,433 684,787,341 670,259,142 794,780,452”

6. Data Centers: The Loudoun Story
   Loudoun County, Virginia · 2026
   Source excerpt

   “In Fiscal Year 2026, data centers generated $1.2 billion in real and personal property tax revenue, representing 39% of the county's overall budget. The FY 2027 adopted budget projects data center revenue at $1.3 billion, representing 40% of the total budget.”

7. Data Center Industry Tax Revenue Report 2024
   Prince William County, Virginia · 2025-06
   Source excerpt

   “Data centers are a cornerstone of Prince William County's commercial tax base, generating $293.7 million in total tax revenue in TY 2024, an increase of 77% over the prior year.”

8. Here's when Lancaster city will see payments from data center agreement
   LNP | LancasterOnline · 2026-02-13
   Source excerpt

   “It has pledged a total of $20 million in direct payments to local causes – $10 million to an economic development fund managed by the community foundation, and $10 million to the city's sustainability efforts.”

9. Building Community-First AI Infrastructure
   Microsoft (On the Issues blog) · 2026-01-13
   Source excerpt

   “We won't ask local municipalities to reduce their local property tax rates when we buy land or propose a datacenter presence. Instead, we'll pay our full and fair share of local property taxes, adding revenue to local towns and cities.”

10. Factors Influencing Recent Trends in Retail Electricity Prices in the United States: What do we know? Where are the gaps?
    Lawrence Berkeley National Laboratory and The Brattle Group · 2025-10
    2 source excerpts

    “Load growth at the state level has tended to depress retail electricity prices in recent years, by spreading fixed costs over greater load.”

    “Importantly, this relationship need not always exist: a higher growth future can increase retail prices if new supply and delivery infrastructure is constrained and costly—as it currently appears to be in some or many states.”

11. 2025 State of the Market Report for PJM, Volume 1
    Monitoring Analytics, LLC (Independent Market Monitor for PJM) · 2026-03-12
    3 source excerpts

    “Inclusion of existing and forecast data center load in the peak load forecast for 2026 resulted in a $7,271,197,971 or an 82.1 percent increase in capacity market revenues for the 2026/2027 RPM Base Residual Auction.”

    “Inclusion of existing and forecast data center load growth resulted in a combined total increase in capacity market revenues for the 2025/2026 BRA, the 2026/2027 BRA, and the 2027/2028 BRA of $23,100,955,341.”

    “Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices.”

12. Frequently Asked Questions about the Maryland Piedmont Reliability Project
    Maryland Office of People's Counsel · 2024-08-08
    Source excerpt

    “The PJM Board approved baseline projects in 2023 totaling over $5 billion to address reliability criteria violations as part of 2022 RTEP Window No. 3. This includes transmission enhancements driven by 7,500 MW of data center load growth in the Dominion Energy and Allegheny Power (FirstEnergy) zones.”

13. AEP Ohio Proposal on Data Centers to Protect Ohio Consumers Adopted by PUCO
    AEP (utility press release) · 2025-07-09
    Source excerpt

    “large new data center customers to pay for a minimum of 85% of the energy they are subscribed to use – even if they actually use less – to cover the costs of infrastructure needed to bring electricity to those facilities.”

14. AEP Ohio Updates PUCO on Data Center Load: Figures Show Tariff is Working
    AEP Ohio (utility press release) · 2026-02-13
    Source excerpt

    “Prior to the PUCO's approval of AEP Ohio's Data Center Tariff, data centers or developers had submitted requests for 30,000 MW, an unprecedented electricity demand for the state.”

15. SCC approves Chesterfield gas plant and Dominion rate hike, creates new rate class for data centers
    Virginia Mercury · 2025-11-25
    Source excerpt

    “The newly-approved plan also creates a new rate class for high load customers that use over 25MW and a load factor of more than 75% monthly.”

16. Tax Incentive Evaluation: Georgia Data Center Sales & Use Tax Exemption
    Carl Vinson Institute of Government, University of Georgia (for Georgia Department of Audits and Accounts) · 2025-12
    2 source excerpts

    “Institute researchers estimated that 30% of data center activity in Georgia was attributable to the presence of the tax incentive, and that the remainder (70%) of data center activity likely occurring without it.”

    “The projected overall RIO is 186.3%, implying that for each $1 of forgone tax revenue from Georgia's High-Tech Data Center Equipment Exemption, the state accrues approximately $2.86 in value-added impact.”

17. Georgia Data Center Sales & Use Tax Exemption (Summary, Revised)
    Georgia Department of Audits and Accounts · 2026-01
    Source excerpt

    “The Institute estimated forgone state tax revenue of $474.2 million in FY 2025.”

18. Texas losing a billion dollars a year on data center tax break
    The Texas Tribune · 2026-04-08
    Source excerpt

    “Texas will lose out on $3.2 billion in sales tax revenue over the next two years thanks to an exemption for the state's booming data center industry, according to the comptroller's office.”

19. 2026 PwC Report: Economic contributions of U.S. data centers, 2023-2024
    Data Center Coalition (industry-commissioned, prepared by PwC) · 2026
    2 source excerpts

    “The Data Center Coalition (DCC) engaged independent consultant PwC to quantify the economic contributions of the U.S. data center industry between 2023 and 2024. ... In 2024, the U.S. data center industry directly employed 1,005,080 people.”

    “The data center industry's total fiscal support to federal, state, and local governments increased from $165 billion in 2023 to $204 billion in 2024, a 24% increase.”

20. Data Centers in Virginia (Report 598)
    Joint Legislative Audit and Review Commission (JLARC), Virginia General Assembly · 2024-12
    5 source excerpts

    “In total, Virginia has over 63 million square feet of data center space on 7,200 acres of land.”

    “Data centers emit low-frequency noise that is not loud enough to damage nearby residents' hearing and rarely loud enough to violate noise ordinances.”

    “The constant nature of data center noise has sometimes been a problem when data centers are located near residential areas.”

    “Nearly all current data centers use 'Tier 2' diesel generators, which DEQ allows to run only in emergencies or as part of routine maintenance testing.”

    “in Northern Virginia, they make up less than 4 percent of regional emissions of nitrogen oxides”

21. Data Centers: Noise & Air Quality Concerns
    Loudoun County, Virginia · 2026
    Source excerpt

    “On July 1, 2026, DEQ began mandating Tier 4-equivalent emissions standards for new or modified generators at data center sites.”

22. Georgia regulators approve massive power grid expansion to serve data centers
    Georgia Recorder · 2025-12-19
    Source excerpt

    “"If the demand doesn't show up, if data centers fail to cover their costs, and when gas prices spike again, Georgia Power customers will be left holding the bag for decades to come," Scarr said.”

23. Prince William Digital Gateway data center project officially dies
    Virginia Business · 2026-07-06
    Source excerpt

    “After a legal battle that lasted more than two years, the controversial Prince William Digital Gateway, a proposed 23 million-square-foot data center complex planned on 2,100 acres near Manassas National Battlefield Park, is officially dead.”

Each source was opened and checked against the excerpt shown. Company statements are identified as such. Figures are as published; where sources differ, each is shown.