Pennsylvania allows data center developers to skip paying a 6% sales tax on their computer equipment \u2014 one of the biggest costs of running a data center \u2014 thanks to a 2021 law passed with bipartisan support from the Legislature.<\/p>\n
Because of the tax break: the state will lose $188.4 million in tax revenue in 2026 alone, per a Department of Revenue\u00a0analysis<\/a> this year. That\u2019s a 358% jump from just two years ago.<\/p>\n Now, five years after the law passed, many of the same lawmakers who voted for the sales tax break are trying to repeal it. The Democratically-controlled House passed a bill with overwhelming bipartisan support<\/a> in late June to accomplish just that. But despite that vote and public backlash against data centers, the Republican-controlled Senate hasn\u2019t acted on that bill.<\/p>\n Instead, the Senate passed an 80-page bill<\/a> on the same day filled with different amendments, including a reference to repeal the tax break for data centers. The Senate then refused to move forward with it because of amendments added by Democrats, a tactic experts say provides \u201ccover\u201d ahead of a consequential election. It allows lawmakers to say they voted against the unpopular tax break without it ever coming to fruition.<\/p>\n Amid the politicking, top leaders from both chambers are taking money from businesses and people who have financial interests in data center growth.<\/p>\n A PennLive review of 2026 campaign finance filings found that the six leaders from the House and Senate took almost half a million dollars in campaign donations from individuals, PACs and business entities that have financial stakes in data center development. Senate President Pro Tempore Kim Ward, R-Westmoreland County, took the largest amount at $123,000 with House Majority Leader Matt Bradford, D-Montgomery County, trailing close behind at $113,000.<\/p>\n Senate Majority Leader Joe Pittman, R-Indiana County, who controls which bills get brought up for a vote, would not say why the Senate hasn\u2019t taken up the House bill. Instead, in an emailed statement he blamed the House Democrats and criticized Gov. Josh Shapiro and his \u201canything but consistent\u201d stances on data centers.<\/p>\n \u201cGiven the Governor has emphasized Pennsylvania now has the \u2018strictest guardrails in the nation\u2019 for data center development, it seems he believes the matter has been addressed,\u201d Pittman said.<\/p>\n In an emailed statement, a spokesperson for Shapiro said he issued his recent executive order implementing guardrails for data centers because the \u201cLegislature failed to enact significant data center restrictions or repeal this tax exemption,\u201d adding that he would be open to \u201cconversations on this issue.\u201d<\/p>\n Ward, the Senate\u2019s highest leader, who took the most in campaign donations, has a hyperscale data center in her district that already got state permits to operate. She deferred all questions to Pittman.<\/p>\n Pittman, whose district has a multibillion dollar data center proposal, said campaign donations do not influence his decisions. He added that he \u201cstrongly prioritizes\u201d his constituents\u2019 concerns and \u201cat the same time, interest groups, lobbyists, and organizations also play a key role in offering a collective view on matters, which are useful and appropriate.\u201d<\/p>\n Who Actually Benefits From the Tax Break? The state Revenue Department estimates it will cost Pennsylvania more than half a billion dollars by 2030. But it\u2019s unclear how accurate that is because the same department estimated the tax break would cost nearly $90 million by 2027, per\u00a0Penn Capital-Star\u00a0reporting<\/a>. The cost has ballooned to almost triple that this year.<\/p>\n The state also allows data centers to use this unlimited tax break in secret, meaning the public doesn\u2019t know how much each entity is using.<\/p>\n The revenue department reported<\/a> that 13 known businesses used the tax break last year with only two requirements: invest up to $100 million and create a maximum of 45 jobs with no specifications on the type of job, including whether they are temporary.<\/p>\n The sales tax break is not unique to Pennsylvania; most states provide tax breaks in some form to aid data center growth.<\/p>\n But do developers planning multibillion dollar infrastructure absolutely need a tax break?<\/p>\n Bob Bair from Pennsylvania\u2019s Building and Construction Trades Council argues they do, especially if they\u2019re smaller developers. He said the tax break might be the \u201cdifference between them locating to Pennsylvania and not.\u201d<\/p>\n The governor\u2019s latest executive order included more guardrails, he added.<\/p>\n \u201cYou offer them the carrot, if they don\u2019t take it, you might have to hit them with a stick,\u201d he said. \u201cWell, the governor just pretty much did that with his [GRID program]<\/a> and says, look, if you don\u2019t do this, this and this, you\u2019re not getting your tax break.\u201d<\/p>\n Shapiro\u2019s order<\/a> requires developers to sign legally binding agreements promising to pay for their own energy, get permissions from local governments, talk to communities in advance and report energy and water usage.<\/p>\n (Four data center projects, which include two Amazon data centers in Falls and Salem townships, already got state permits before the governor\u2019s new rules kicked in but would be subject to the rules to obtain future permits.)<\/p>\n But Anthony Elmo with GoodJobsFirst, a national policy organization that advocates for government accountability with economic development, disagrees about the true benefits of the tax break, especially if there isn\u2019t full transparency.<\/p>\n \u201cIf Pennsylvania does not disclose how much each company receives, how many permanent jobs result, or whether the investment would happen without the tax break, lawmakers have little basis for claiming taxpayers receive a strong return,\u201d Elmo said.<\/p>\n \u2018Degree of Cover\u2019 But for a bill to become law in Harrisburg, it needs to pass both the House and the Senate before it reaches the governor\u2019s desk.<\/p>\n In this case, both chambers passed bills to repeal the sales tax break for data centers. But the Senate\u2019s version isn\u2019t considered \u201cclean.\u201d<\/p>\n Instead, the Senate took a tax reform bill<\/a> that the House passed last year and heavily edited it. Some of the added language increased funding for the education tax credit program; eliminated electric gross receipts tax; and expanded the manufacturing and investment tax credits.<\/p>\n Buried deep in the 80-page document is language repealing the sales tax break for data centers.<\/p>\n The House then added their own amendments to the bill, which ballooned to 203 pages with language to create a digital advertising tax, increase reporting requirements for the education tax credit and utility profits, among other things.<\/p>\n Senate Leader Pittman said that \u201cHouse Democrats amended the legislation into an unrecognizable bill.\u201d<\/p>\n The House did pass a clean bill earlier this year<\/a>, meaning the bill only has language that gets rid of the tax break. The bill, sponsored by Rep. Greg Vitali, D-Delaware County, passed 197-5 with overwhelming support from both Republican and Democrat lawmakers. And the Senate hasn\u2019t brought it up for a vote.<\/p>\n Pittman did not directly answer why. However, in an August press release, he said that \u201cwork is also being undertaken\u201d to bring up data center-related bills in the fall when lawmakers are back in session for nine days.<\/p>\n Sen. Cris Dush, R-Centre County, called the situation \u201cstrange\u201d but said \u201cunfortunately, that\u2019s far too common.\u201d<\/p>\n \u201cWhen people see that there\u2019s an opportunity for a bill that everybody wants to get behind\u2026’okay, let me stick this into that so that I can get the thing that I\u2019ve been working on for five or ten years and finally get it passed,\u2019\u201d Dush told PennLive.<\/p>\n With the midterm elections just 10 weeks away, lawmakers, especially in vulnerable districts, are desperate to get the word out about their stance against data centers.<\/p>\n Showing how they voted on the tax break is the \u201clowest hanging fruit,\u201d said Chris Borick, a longtime Pennsylvania pollster and professor at Lehigh University.<\/p>\n But election years also come with fewer actual laws passed, he said.<\/p>\n \u201cSo now I think they want to have a little bit of it both ways,\u201d Borick told PennLive. \u201cIt gives them a degree of cover where they could say, yeah, I voted on this and the process in Harrisburg is holding it up right now. And I don\u2019t think they\u2019re all that sad if that\u2019s the case.\u201d<\/p>\n Track hyperscale data centers projects in Pennsylvania via our map and database<\/a>.<\/p>\n If we\u2019ve missed one, please submit via this form<\/a>. Click here to see our methodology<\/a> and read more stories in PennLive\u2019s ongoing data center coverage.<\/p>\n \u00a92026 Advance Local Media LLC. Visit pennlive.com<\/a>. Distributed by Tribune Content Agency, LLC.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Pennsylvania allows data center developers to skip paying a 6% sales tax on their computer equipment \u2014 one…\n","protected":false},"author":2,"featured_media":279225,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[28,30,29],"class_list":["post-279224","post","type-post","status-publish","format-standard","has-post-thumbnail","category-pennsylvania","tag-pennsylvania","tag-pennsylvania-headlines","tag-pennsylvania-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts\/279224","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/comments?post=279224"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts\/279224\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/media\/279225"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/media?parent=279224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/categories?post=279224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/tags?post=279224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
State lawmakers have pushed dozens of mailers and press releases this year touting their votes on bills trying to repeal the data center tax break. But the tax break still remains and data center developers are using more and more of it every year.<\/p>\n
Lawmakers, from both parties for the most part, want the tax break gone.<\/p>\n