More Than 100 Rural Data Centers Eligible for US Tax Break

Washington — More than 100 data center projects already in development across rural America could qualify for a new round of federal corporate tax benefits set to take effect January 1, according to research by the Searchlight Institute reviewed exclusively by WIRED.

The benefits flow from changes the One Big Beautiful Bill Act made last year to the opportunity zone program, a tax incentive first created during the first Trump administration with bipartisan support. The program offers tax breaks to companies that invest in designated low-income census tracts. Under the expanded rules, rural tracts become newly eligible for the same treatment, opening the door for capital-intensive projects — including hyperscale data centers — to qualify.

What does the new tax break actually do?

Ways and Means Committee chair Jason Smith said in a statement last year that the revised program "may significantly lower barriers for large-scale, capital-intensive projects in rural areas — most notably hyperscale data centers." Smith said the changes make "the economic case for building data centers in designated rural opportunity zones" far more compelling.

How many projects could qualify?

Searchlight Institute researchers cross-referenced data center projects in development with rural census tracts newly eligible for the program. Using what WIRED described as a conservative database of fewer than 700 planned or under-construction data centers nationally, Searchlight identified more than 100 in rural zones that could already be eligible. Other industry datasets put the total number of US data centers in development closer to 1,500, suggesting the eligible pool is likely larger once the full build-out pipeline is accounted for.

Why are some large operators not rushing to apply?

WIRED reports that some hyperscalers — the largest cloud and AI infrastructure operators — "do not seem eager to take the free cash," though the publication does not detail the companies' reasoning in the material reviewed here.

What do critics say about the economic payoff for rural communities?

Emily Kraschel, a tax policy analyst at Searchlight Institute, said the eligibility bar is low. "Right now, the only requirement to get the benefits is capital investment," Kraschel said. "However, that doesn't guarantee that that money is necessarily creating jobs or creating a local economic boost. You'd be more sure of that with a more traditional factory that requires lots of workers. But with a data center, that assumption goes a little wonky."

The debate arrives as opposition to data center construction — including among rural and Republican voters — has intensified, WIRED reports, making tax breaks for some of the world's largest companies a political flashpoint in communities where the facilities are sited.

By the numbers

• 13% of currently operating US data centers are located in rural areas, versus 67% of planned facilities, according to Pew research cited by WIRED.
• Searchlight found 100+ rural data center projects potentially eligible for the new tax benefits using a database of under 700 tracked projects — a fraction of the roughly 1,500 data centers some industry estimates say are in the broader US development pipeline.

The tax provisions take effect January 1, giving rural jurisdictions and data center developers roughly three months to position projects ahead of the deadline.

AlterEgo — A keyboard for character voices. Five free persona rewrites a day.