Twelve months ago, most states were still competing to land the next hyperscale data center. That’s no longer true.
In 2026, Ohio and Illinois paused their data center tax breaks. Texas froze new data center grid connections pending a statewide audit. Virginia, the world’s largest data center market, created a first-of-its-kind tax on data center electricity use. And on September 16, the U.S. House passed a bipartisan bill, 417 to 3, to keep data centers from shifting their grid costs onto household utility bills.
Public opinion is moving too. A March 2026 Gallup poll found that 7 in 10 Americans oppose building an AI data center in their area, a higher opposition rate than for a local nuclear plant.
For homeowners, data centers also impact their property taxes and electricity bills. What follows is how the mechanics work, what reductions have been granted, and what changed in 2025 and 2026.
The Two Buckets: Real Property and Personal Property
Before diving into the impact data centers have on local areas and homeowners, we first need to explain how property taxes work for data centers. In the U.S., nearly every data center is taxed on real property
Real property is the land and building shell. It is taxed like any commercial building: assessed value times the local millage rates determined by the county, city, school district, and other special districts.
Business personal property (BPP), also called tangible personal property (TPP), is the equipment inside: servers, GPUs, switchgear, chillers, UPS batteries, generators. In states that tax business equipment, this is where the money is.
Where you’re located heavily impacts the real and personal property tax benefits you’d receive from a nearby data center.
The Property Tax Trade-Off: Relief in Some Places, Burden Shifts in Others
In some cases, a single campus is worth more than thousands of homes combined. Homeowners usually benefit when the data center’s value stays on the tax rolls.
For instance, Loudoun County, Virginia, has reduced property taxes by roughly 30% over the past decade, supported by revenue from about 250 data centers. A 2026 Northern Virginia Technology Council analysis found that without that revenue, the typical Loudoun homeowner’s bill would need to rise about $5,800 a year, or 91%, to fund the same services.
In Quincy, Washington, data centers have helped reduce property taxes by about 70% over two decades.
The newest example is Effingham County, Georgia. In September 2026, commissioners approved a property tax cut expected to lower the average household’s bill by roughly 40%, backed by a planned $20 billion OpenAI data center. OpenAI will still receive a 50% property tax abatement for 15 years.
“The issue comes down often to whether a data center is paying those property taxes or if it’s been abated.” — Jared Walczak, Senior Fellow, Tax Foundation, via Money
In Illinois, the interaction between tax incentives, assessment appeals, and tax-rate mechanics shows how commercial valuations affect local property tax distribution.
In suburban Chicago, data centers received nearly $100 million in combined property tax savings through county incentives and assessment appeals, according to August 2026 reporting. These reductions lowered the facilities’ taxable value by about $2 billion across Elk Grove Village, Northlake, and Franklin Park.
In Northlake, where three data centers make up roughly 28% of the tax base, the average homeowner would save more than $2,000 a year, almost 30% of their bill, without those breaks.
Because taxing bodies set overall revenue levies, a decrease in commercial assessed value shifts a larger share of the levy to remaining properties, including residential real estate.
Because of this, we recommend that homeowners, particularly near abated data centers, appeal their property taxes to ensure they’re not overpaying or subsidizing their neighbors who do.
The Sales Tax Impact
State sales tax exemptions are the other half of the equation. According to an April 2026 report from the National Conference of State Legislatures, at least 38 states exempt data center equipment from sales tax. Those exemptions have grown far beyond early forecasts. For example, Ohio’s exemptions cost the state $1.6 billion in 2025, 11 times the projected amount.
In a Tax Foundation model of a $1 billion facility, the shell accounts for roughly $225 million and equipment for about $775 million, with servers and chipsets alone making up 75% of the tangible personal property on a five-year replacement cycle.
Home Values: No Single “Data Center Effect”
If you’re a homeowner wondering whether a data center down the road will hurt your home’s value, the most recent research is reassuring overall but mixed up close.
The National Association of REALTORS®’ 2026 Data Center Impact Report, released in September, found that counties with 10 or more data centers have a median home value of $431,750, compared with $174,500 in counties with none.
NAR cautions that data centers tend to locate in already strong markets, so the gap doesn’t prove data centers caused higher values.
“There is no single data center effect. Instead, the story varies significantly depending on the local market. … We do not see evidence of weaker housing markets in counties with a large data center presence. But these are county-level numbers, and they can’t tell us what happens to an individual home next to a facility.” — Lawrence Yun, Chief Economist, National Association of REALTORS®
Real estate professionals are also split. In NAR’s survey, 25% of agents reported a positive effect on nearby home values and 22% a negative one.
When asked whether data centers affected demand for residential properties, 26% said demand decreased, 27% said it stayed the same, and 19% reported an increase.
Source: “2026 Data Center Impact Report,” National Association of REALTORS®
Other research points in the same direction:
Northern Virginia: A George Mason University analysis found homes closer to data centers sold for more, but likely because data centers cluster near strong roads, utilities, and jobs.
Indiana: Homes within 1.5 miles of data centers appreciated 42% from 2021 to 2026, versus 41% for their local markets. However, they trailed the market in three of the four sites studied.
Nationally: Realtor.com found no measurable difference in sale or listing prices after large data centers opened. It projects that more than 2% of U.S. home sales will occur within five miles of a large data center by the end of 2027, more than double the 2018 share.
In short, being in a data center county hasn’t hurt home values. Living right next to one is still a local, case-by-case question.
Electricity: The Cost Homeowners Feel Most Directly
The electric bill is where the impact is most consistent.
On July 14, 2026, PJM Interconnection, the grid operator serving 13 Mid-Atlantic states and Washington, D.C., released results from its 2028/2029 capacity auction.
In simple terms, a capacity auction is how the regional grid operator (PJM) buys commitments from power plants to ensure enough electricity will be available in the future.
In the latest auction, electricity demand soared, driven primarily by new data centers. Demand was so high it cleared its legal maximum cap for the third straight auction. PJM’s own simulation showed that without the cap, prices would have been more than 70% higher.
PJM’s independent market monitor says data centers drove about 40% of capacity costs in the previous auction. Their large share of supply costs pushed power plants’ availability fees to more than five times 2024-2025 levels, with costs flowing into household utility bills through 2029.
The previously mentioned NAR analysis also found that residential electricity rates rose 21.4% from 2020 to 2024 in counties with 10 or more data centers, compared with 15.7% in counties without them. However, NAR notes that rate data is measured at the state level, so the county comparison is imperfect.
For some households, the increase has been dramatic. John Steinbach, who has lived in his Manassas, Virginia, home for nearly 40 years, told ARLnow that his January 2026 electric bill was $281, up from about $100 the month before.
The 2026 Policy Shift: What Has Actually Passed
After years of competing for data centers, states changed course in 2026. Here are a few items that have been enacted or put in place:
Virginia: Gov. Abigail Spanberger signed a budget on June 30 that creates a statewide electricity consumption tax on data centers: $0.011 per kilowatt-hour, capped at $600 million a year. It’s expected to raise about $1.2 billion over two years. The state’s sales tax exemption, which costs more than $1 billion a year, survived for now.
And on September 18, Spanberger signed Executive Order 22. It bans state agencies from signing nondisclosure agreements with data center developers and begins a push to end by-right approvals for facilities over 25 megawatts.
Ohio: In May, Gov. Mike DeWine paused new data center tax exemptions while a legislative committee studies the industry.
Maine: Maine fully repealed all available data center tax exemption subsidies. Maine's law removes data centers beginning operations on or after August 1, 2026, from eligibility for incentives, including the business equipment tax exemption.
Illinois: Gov. JB Pritzker suspended new state data center incentives for two years, starting July 1, citing energy affordability and water use.
Texas: On August 3, Gov. Greg Abbott paused new data center grid connections pending an audit of up to 300 projects. ERCOT faces about 474 gigawatts of connection requests, roughly 90% of them from data centers, and aims to finish the audit by December.
Oklahoma and South Dakota: Both states signed ratepayer protection laws in 2026. They require separate rates and terms for large power users so their costs don’t land on residential customers.
Georgia: The Peach State is a notable exception. Lawmakers there left the state’s data center tax breaks in place, and ratepayer protections have come through Public Service Commission rules rather than new legislation.
Nationally: Only 13 states now have no utility tariff rules for data centers and other large power users. The House-passed Ratepayer Protection Act would require state regulators to consider rules making data centers pay the “full, incremental” cost of the power infrastructure they need.
However, analysts say it’s unlikely to clear the Senate before the November midterms.
What Homeowners Should Watch For
1. Whether data centers in your county are paying full property taxes. Revenue only reduces your bill if the facilities stay on the tax rolls. Abatements and payment-in-lieu agreements reduce what they pay and can shift the burden to small businesses and homeowners.
2. Your utility’s large-load tariff. If your state is one of the 13 without large-load tariff rules, or your utility is in PJM, the cost of serving data centers is more likely to appear in residential rates.
3. Local zoning decisions. With Loudoun County ending by-right approvals, Prince William County moving to do the same, Virginia’s governor pushing for a statewide change, and pauses in Texas, Ohio, and Illinois, more of these decisions are moving to public hearings where homeowners can weigh in.
Some Data Centers Appeal Their Assessments. Most Homeowners Don’t.
When large commercial property owners challenge their assessments and win, the local tax burden often shifts to other property owners, particularly those who don’t appeal.
Homeowners have the same right to appeal. However, most don’t. Our 2026 national homeowner survey found that 74% of U.S. homeowners have never appealed their property tax bill, and 57% of those didn’t know they could.
Homeowners can’t vote on a tax abatement or rewrite a utility tariff. But they can check whether their assessment matches what their home is actually worth, and appeal if it doesn’t.
Methodology and Sources
This article draws on public reporting and research published between November 2025 and September 2026, including:
National Association of REALTORS® 2026 Data Center Impact Report
PJM Interconnection 2028/2029 Base Residual Auction Results (Enel North America)
64% of U.S. Homeowners Are Shocked by Their Property Tax Bill, but 3 in 4 Have Never Appealed
Figures reflect the most recent publicly available data as of September 28, 2026.
