Illinois Gov. Pritzker Pauses Data Center Tax Incentives to Weigh Growth Against Costs

Illinois Gov. JB Pritzker announced Friday that he is pausing the state’s data center tax incentives starting in July. He directed state officials to pause agreements under the Data Center Investment Program, which exempted data center developers and operators from certain state and local taxes and provided additional tax credits for some projects.

“Illinois has an opportunity to continue leading in technological innovation and economic growth, but we also have a responsibility to protect working families and local communities as the data center industry rapidly expands,” Pritzker said in a statement.

“I am directing my administration to pause the processing of data center agreements while we continue working with the General Assembly and stakeholders on a comprehensive framework that protects affordability, safeguards our natural resources, and ensures responsible growth across Illinois,” he continued.

Pritzker called on state lawmakers to work on reforms during the fall veto session.

His decision follows a similar move by Ohio Gov. Mike DeWine, who suspended the state’s tax exemption for new data centers last week. DeWine directed the Ohio Tax Credit Authority to temporarily halt consideration of new exemption requests while state lawmakers study data center growth in Ohio.

Virginia has also considered ending its tax exemptions for data centers. The issue has held up budget negotiations in the state Legislature. ” Data center projects were once viewed as a boon for states.

They have increasingly become a political liability amid concerns about rising consumer electricity prices and potential environmental impacts.