Rep. Andrea Salinas, D-Ore., has introduced legislation that would impose a federal tax on electricity consumed by data centers, an initiative that could add millions of dollars in annual costs for large AI data facilities.

The Data Center Community Reinvestment Act of 2026 would levy a 1-cent-per-kilowatt-hour excise tax on data centers with more than 1 megawatt (MW) of power capacity. The tax would cover electricity purchased from utilities as well as power generated onsite.

Based on current US data center electricity consumption, Salinas’ office estimates the measure would generate about $1.76 billion annually.

The legislation is introduced amid significant citizen pushback against AI data center growth, which is placing new demands on the power grids that support data centers. Large AI facilities can require hundreds of megawatts of capacity, creating questions about how the costs of power generation should be divided among data center operators and existing utility customers.

For large operators, a penny per kilowatt-hour quickly becomes a sizable expense. A 100 MW facility running continuously at full capacity would pay about $8.76 million annually. The bill would cost a 500-MW operation about $43.8 million a year, while a 1-gigawatt facility would owe approximately $87.6 million. Actual costs would fall with lower utilization. For instance, at a 90% annual load factor, the corresponding tax bills would be approximately $7.9 million, $39.4 million and $78.8 million.

Furthermore, the bill could reach far beyond the largest AI campuses. Its 1-MW threshold would also cover qualifying colocation and enterprise data centers.

Yet electricity consumption alone does not necessarily measure the infrastructure expense created by a data center. Two 500 MW facilities could produce sharply different grid costs based on their locations, operating schedules and requirements for transmission, substations and new generation.

Reinvestment in Five Government Programs

The proposed tax would not attempt to calculate those individual grid costs. Instead, the federal government would divide the revenue equally among five programs: the Land and Water Conservation Fund, Housing Trust Fund, Hazardous Substance Superfund, Highway Trust Fund and a new Energy Technology Trust Fund.

At the projected $1.76 billion in yearly collections, each would receive roughly $352 million. The new energy fund would support federal loan guarantees for clean energy, advanced nuclear technology and grid infrastructure. The additional money for the Housing Trust Fund would more than double its current funding, while the Land and Water Conservation Fund would receive an increase of nearly 40%.

The federal proposal was referred to the House Ways and Means Committee, with additional referrals to the Energy and Commerce Committee and the Science, Space, and Technology Committee.

Virginia has already moved in a similar direction on taxation. A 1.1-cent-per-kilowatt-hour tax on data center electricity took effect July 1, covering utility-supplied and self-generated power. The state can retain up to $600 million annually from the tax, with excess collections subject to refunds to operators. The tax is scheduled to run through June 30, 2028.