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North Carolina's Short Session Opens With Bipartisan Push to Repeal Data Center Tax Breaks — Up to $450 Million a Year on the Line
NC
Fiscal / Data Centers / State Legislation
April 22, 2026
Source: NC Newsline
The North Carolina General Assembly returns to Raleigh today for its 2026 short session, and one of the few measures with visible bipartisan momentum is a proposal from Gov. Josh Stein (D) to modify or repeal the state's sales tax exemptions on data center electricity and equipment purchases. Per NC Newsline's reporting, the proposal is “likely to gain bipartisan traction this session."
The current tax break is not new. North Carolina enacted sales tax exemptions on data center purchases of electricity and equipment in 2006 and expanded them in 2015. At the time, the industry was still relatively small and the incentive was framed as a way to “induce capital to invest.” Stein's argument is that the economic conditions that justified the 2006/2015 framework no longer hold.
Stein to the North Carolina Energy Policy Task Force earlier this month:
> “We lived in an entirely different world at that time. No one could have anticipated the explosive growth of data centers and how much energy they consumed, and because data centers at that point were a brand new industry, they benefited from financial incentives to induce capital to invest."
> “We must be clear-eyed about the cost of data centers to ratepayers in terms of higher power bills, and clear about their cost to taxpayers in terms of lost revenue."
The numbers, per the North Carolina Department of Commerce:
- About $50 million a year — the current estimated value of state sales and use tax exemptions claimed by data centers
- "Expected to rise sharply" — Commerce's characterization of the trajectory as more data centers are planned and built
- Up to $450 million a year — potential future state revenue if the exemptions are fully repealed, in addition to avoiding the substantial cost of the construction exemptions
- "Tens of millions" — even a partial repeal or rewrite, per Commerce projections
Stein also, notably, cited President Trump's March “ratepayer protection pledge" in making his case — a cross-aisle framing that gives Republican legislators political cover to support the repeal. The rhetoric aligns: both the Democratic governor and the Republican president are framing data centers as an active threat to household electric bills.
The state-level push is happening against a backdrop of municipal action across North Carolina: a handful of cities and towns have already implemented one-year moratoriums on new data center applications while they research the infrastructure implications and draft zoning ordinances. The same dynamic is visible in Ohio (Portage County moratoriums — see April 20 Docket), Pennsylvania (East Manchester Township — see April 20 Docket), and Maine (the pending LD 307 statewide moratorium). What makes North Carolina distinct in this week's coverage is the fiscal lever — removing the financial incentive rather than imposing a geographic pause.
The short session began in Raleigh this morning. The Select Committee on Property Tax Reduction and Reform approved the related constitutional amendment (on property tax limits) last week. Legislation to modify or repeal the data center exemptions has not yet been introduced in text form, but the prospect is named explicitly in the Governor's budget recommendations. Similar proposals have been considered in other states this year, per NC Newsline.
What You Can Do
If you live in North Carolina:
- North Carolina General Assembly — 2026 short session begins April 22. Find your legislators at ncleg.gov/findyourlegislators
- The North Carolina Energy Policy Task Force is the body to which Gov. Stein delivered his remarks on data center tax exemptions. Task force materials are at energy.nc.gov
- House Select Committee on Property Tax Reduction and Reform — chaired by Rep. Julia Howard (R-Davie), formed by Speaker Destin Hall (R-Caldwell). Committee schedules at ncleg.gov
- If your city or town has not yet adopted a moratorium or zoning framework, municipal council and planning board meetings are the local-level equivalent of what Raleigh is doing statewide
If you live in a state with similar data center tax exemptions:
Most states that created data center tax incentives did so between 2005 and 2015 — under assumptions that no longer match today's load profiles. Search your state's Department of Revenue website for “data center sales tax exemption” or “data center tax incentive” to see what your state currently grants. If the exemption predates the AI-driven load wave, it was designed under fundamentally different premises, and a cost-benefit analysis from your state commerce agency may already be in progress. Your state's Governor's budget, legislative fiscal research staff, and state auditor are the three most useful sources for what the exemption actually costs.
If you work in local or county government:
The Commerce estimates Stein cited — $50M/year currently, up to $450M/year potential — are state-level figures. Property tax and local incentive figures are separate. County auditors and municipal finance officers can calculate the local revenue impact of any data center siting in your jurisdiction, including PILOTs (payments in lieu of taxes), abatement years, and infrastructure cost offsets. If that analysis does not exist for a project being reviewed in your community, that is the first document to request.
Community Takeaway
This is the regulatory wall's fiscal half. While Maine, Ohio, and Virginia debate whether to permit additional data center construction, North Carolina is moving to stop subsidizing the construction already underway. Both levers work on the same underlying problem — the gap between what data centers pay and what the rest of the state absorbs — but they operate on different political geometries.
A moratorium is a hard no, easy for opponents to rally around and hard for incumbents to defend. A tax-exemption repeal is a softer instrument: no one is banning anything, the industry can still build, the state just stops paying for it. That is why the NC proposal has bipartisan traction where a statewide moratorium probably would not. It is also why the proposal is more politically durable in the long run — tax policy, once changed, tends to stick, while moratoriums expire on predictable clocks.
For communities elsewhere, the most useful question from NC's session is also the most uncomfortable one: What did my state give away, and under what assumptions, and are those assumptions still true? The 2006 and 2015 tax incentives were written when a 5-megawatt data center was large. The hyperscale facilities being proposed today are 500 MW, 1,000 MW, and up — two orders of magnitude larger, with energy consumption profiles the 2006 legislature never contemplated. If your state's incentive language has not been revisited since that era, North Carolina's session is the template for what that revisit looks like — and the dollar figures it can unlock.
Source: NC Newsline, April 22, 2026.