American taxpayers are footing massive bills for artificial intelligence (AI) data center construction with little transparency about which tech giants benefit, according to a new study that reveals states lose up to 70 cents on every tax dollar exempted.
The report, “Cloudy Data, Costly Deals,” published this month by corporate accountability nonprofit Good Jobs First, examined how 36 states offer economic development subsidies that exempt data centers from sales and use taxes on building materials and IT equipment. It determined only 11 states disclose which companies receive these breaks — and even then, they typically reveal only shell LLCs created for projects, concealing the parent corporations behind them.
Among the 11 states (Arizona, Connecticut, Illinois, Indiana, Minnesota, Nevada, Ohio, Pennsylvania, Texas, Washington, and Wisconsin), just five revealed subsidy amounts, and none confirmed whether promised jobs materialized, making it impossible to assess whether taxpayers got their money’s worth.
A major contributor to the problem, the report noted, was that disclosure standards fall well below what’s required for other subsidized projects.
Meanwhile, costs are adding up for taxpayers: Each permanent data center job costs them at least $1 million in subsidies. States that calculated returns found they’re losing between 52 cents and 70 cents per dollar of tax exemption granted.
Virginia, dubbed “data center capital of the world,” surrenders nearly $1 billion in tax revenue without disclosing recipients or amounts. In Louisiana, Meta Platforms Inc. is constructing the world’s largest data center complex, yet the public remains in the dark about its tax breaks.
Escalating costs reflect the enormous scale of modern data centers. The newest hyperscale facilities that power AI can span the size of several Walmart Supercenters. Meta’s $10 billion hyperscale data center in Louisiana will cover an area equivalent to Manhattan, while Amazon.com Inc. announced a similarly expensive project in North Carolina and Alphabet Inc.’s Google is building a $4 billion facility in Arkansas.
The study comes as Meta, Google, and Microsoft Corp. spent an estimated $360 billion on capital expenditures in the past year, primarily constructing data centers across the U.S. With even more investment projected in coming years, most of that spending goes toward building materials and specialized equipment including chips, cables, and industrial-sized generators.
At the same time, rapid data center expansion is straining regional power grids. Without intervention, Americans could face electricity bill increases of 70% by 2030, according to the findings.
A few states did earn modest recognition for better practices. Indiana publishes PDF contracts with individual companies and lists approved subsidies. Nevada discloses promised jobs, wages, and subsidies, though outcome data appears only years later.
Good Jobs First recommends states eliminate or reform data center tax exemptions. However, competitive pressure during the AI building boom makes change unlikely. Georgia and Ohio legislatures voted to sunset exemptions, only to see governor’s veto the measures. At minimum, the report urges, states should mandate full transparency, publicly disclosing which companies receive subsidies, amounts granted, and promised benefits.
Financial impact on state budgets is also substantial. An April study by Good Jobs First, “Cloudy with a Loss of Spending Control: How Data Centers are Endangering State Budgets,” found that 10 states lose more than $100 million annually through sales and use tax exemptions for data centers. Texas and Virginia each forfeited approximately $1 billion, while Illinois gave up $370 million in 2024. In Arizona’s small but expanding data center market, subsidy costs have skyrocketed by 1,000% in just a few years.
