The Pulse
One Big Beautiful Bill Could Extend Tax Breaks to Rural Data Centers
A federal expansion of Opportunity Zones could make more than 100 rural data center projects eligible for tax benefits starting January 1, 2027. Microsoft, Meta and Amazon say they do not use the program, while researchers question whether
AI.info Team ·
More than 100 data centers in rural areas could qualify for expanded federal tax benefits, according to research reviewed by WIRED. The projects span different stages of development, and eligibility does not mean their owners will claim the benefits. The tax changes take effect January 1, 2027, under the One Big Beautiful Bill Act.
More Than 100 Projects Could Qualify
Searchlight Institute researchers compared planned and in-progress data center locations with rural census tracts that may qualify for the expanded Opportunity Zone program. Their analysis used a database of fewer than 700 projects, which WIRED described as conservative; other datasets count nearly 1,500 data centers under development in the United States.
The scale of the possible eligibility comes as construction shifts toward rural areas. Pew Research Center found that 67% of planned data centers are in rural areas, compared with 13% of operating facilities. Its planned category includes projects under construction, planned or listed as “land banked.”
The original Opportunity Zone program offered tax benefits for investment in designated low-income census tracts. The new law adds rural-focused incentives. A House Ways and Means Committee statement describes a 30% basis step-up after five years for qualifying rural funds, a lower threshold for substantial improvements, and a rolling five-year deferral of capital gains.
A Fund Must Connect the Site to the Tax Benefit
A data center does not qualify simply because it sits in an eligible rural tract. The company or investors must set up a specialized investment vehicle to pursue the tax treatment. Because claims can be confidential IRS information, the public may not learn which projects use the program unless companies disclose that themselves.
The distinction matters: the tax benefits apply through the investment structure, rather than arriving automatically with a construction permit. The incentives are intended to attract capital to designated areas, but the requirement does not guarantee that a project will hire locally or produce a broader economic boost.
Amazon, Microsoft and Meta Say They Do Not Use It
Microsoft, Meta and Amazon told WIRED they do not use the Opportunity Zone program for their data center projects. Microsoft’s general counsel of infrastructure legal affairs, Rima Alaily, said the company “does not use the opportunity zone program to invest in the purchase or construction of its data centers.” Amazon said it does not actively seek land in opportunity zones and has not claimed the benefit; Google did not respond to WIRED’s request for comment.
Those statements do not settle how smaller or less visible developers may respond. University of Texas at Austin government professor Nathan Jensen told WIRED he would be “very surprised” if companies were not considering rural Opportunity Zones in their site decisions, calling the incentive “essentially free money.”
Local Jobs Are Not a Condition
The possibility of investment brings an unresolved question for communities hosting the facilities: what should the public expect in return? Data centers can employ workers during construction, but the lasting workforce they require is a point of dispute. Opportunity Zone projects have no requirement to create jobs.
“Right now, the only requirement to get the benefits is capital investment.”
Emily Kraschel, tax policy analyst at the Searchlight Institute, as quoted by WIRED
Kraschel said capital spending alone does not ensure new jobs or a local economic lift. Senator Josh Hawley introduced the No Tax Breaks for Data Centers Act on September 17, 2026, which would exclude data centers from the program while preserving it for other eligible businesses and property. The measure was introduced legislation, not an enacted change.
For now, the expanded rural benefits are scheduled to begin January 1, 2027. Whether any particular facility receives them may remain difficult to verify unless its company chooses to say so.