Northern Virginia Technology Council Urges Removal of Data Center Tax Repeal from State Budget

Industry group warns Senate proposal to end the data center sales and use tax exemption eight years early would weaken Virginia's competitive advantage and global leadership in digital infrastructure.

MCLEAN, Va., March 10, 2026 /PRNewswire/ -- The Northern Virginia Technology Council (NVTC), representing more than 500 member companies across the region's technology ecosystem, today expressed strong concern regarding a Virginia State Senate's budget proposal that would eliminate the retail sales and use tax (SUT) exemption for data center equipment and software beginning January 1, 2027, eight years earlier than the current statutory sunset of 2035.

NVTC warned that accelerating the expiration of the exemption would introduce uncertainty for an industry that plans capital investments years in advance and undermine Virginia's long-standing reputation as the global leader in digital infrastructure.

"Virginia's leadership in data centers did not happen by accident," said Jennifer Taylor, president and CEO of NVTC. "It is the result of consistent public policy, a stable business environment, and a commitment to supporting innovation and investment. Changing the law now, with very little runway, risks eroding Virginia's credibility as a global technology leader."

"Virginia's technology economy depends on policy stability and long-term investment certainty," said Greg Baroni, chair of the NVTC Board of Directors and founder and CEO of Attain Enterprises. "Data centers are foundational infrastructure for cloud computing, cybersecurity, the rapid growth of generative AI, and the broader digital economy. Preserving a predictable policy environment will help ensure Virginia continues to attract investment, create high-quality jobs, and remain a global technology leader."

The SUT exemption has been a key driver of Virginia's success in attracting large-scale digital infrastructure investment and has helped position the Commonwealth as the world's largest data center hub. In recent years, Virginia has attracted $157 billion in capital investment and the Virginia Economic Development Partnership estimates that 79% of that investment came from the data center industry.

Data centers play a central role in Virginia's rapidly expanding artificial intelligence and digital economy ecosystem.

According to NVTC's latest research report, "The Impact of Data Centers on Virginia's State and Local Economies," produced by Mangum Economics, the industry generates significant economic benefits across the Commonwealth, including:

• Nearly $40 billion in total economic activity, supporting more than 112,000 jobs statewide
• Approximately $9 billion in employee compensation from operations and construction
• More than $1.5 billion in annual state tax revenue, along with $1.3 billion in property tax revenue in Northern Virginia
• Growing advanced manufacturing and supply chain investment, with at least six suppliers announcing new Virginia facilities since 2024
• Significant community investment supporting schools, transportation, housing, and workforce development

Independent studies by the Joint Legislative Audit and Review Commission (JLARC) and the Virginia Department of Taxation have also confirmed that Virginia's data center SUT exemption delivers substantial net economic benefits to the Commonwealth.

"At a time when states across the country and countries around the world are competing aggressively for digital infrastructure investment, Virginia must remain focused on maintaining its competitive advantage," Taylor said.

NVTC is respectfully urging policymakers to remove the proposal from the 2026 Virginia State Senate's budget proposal and to preserve the exemption through its statutory sunset in 2035.

"NVTC and our member companies stand ready to work with the Governor and the General Assembly to ensure Virginia remains the global leader in digital infrastructure while continuing to deliver strong economic benefits for Virginians," Taylor said.

For 35 years, NVTC has served as the collective voice of the region's technology community, working to strengthen Northern Virginia's position as one of the nation's leading technology hubs and to advance Virginia's innovation economy.

About Northern Virginia Technology Council
NVTC is where the region's tech community comes together. Representing 500 members—from bold startups to Fortune 100 leaders—NVTC drives innovation, fosters connections, and advocates for policies that fuel growth and position Northern Virginia as a global leader in technology. Through initiatives in cybersecurity, generative AI, cloud computing, space, and more, NVTC empowers the tech community to shape the future. Learn more at www.nvtc.org.

SOURCE Northern Virginia Technology Council