Once known for romance and rolling hills, Virginia's iconic slogan — "Virginia is for lovers" — may need an update. Perhaps it might be more fitting to say now that "Virginia is for data centers."
In fact, no other state hosts more of the cavernous computing facilities that power artificial intelligence and cloud services and now some lawmakers are questioning whether the tech industry still needs taxpayer help to stay.
The state held 13% of all reported data center operational capacity worldwide and a quarter of all capacity in the Americas in 2024, according to the University of Virginia's Weldon Cooper Center for Public Service. Loudoun County, often called "Data Center Alley," has become the epicenter of that expansion.
Virginia's dominance is clear in the numbers. The state has 35 gigawatts of operational data center capacity — more than any other state — compared with Texas's 27 gigawatts and Pennsylvania's 14 gigawatts, according to Reuters. Planned increases will push Virginia's total even higher, with 31.170 gigawatts in development, compared to 24.337 in Texas and 14.031 in Pennsylvania. Developers in northern Virginia say data centers now outbid every other buyer for land parcels, often by wide margins.
Several advantages made Virginia so attractive. The state has one of the best Internet infrastructures in the U.S. and the 10th lowest commercial electricity costs, according to the U.S. Energy Information Administration.
But it also offered major incentives: a $1.6 billion annual tax break that waives the minimum 5.3% sales tax to attract data center projects, as reported by The Associated Press. Virginia's tax department says the industry has invested more than $80 billion in the state and created thousands of jobs in just the past two years.
Yet with prosperity has come pushback. Residents complain about noise and the strain on the power grid and some farmers are rejecting massive buyout offers, according to GlobeSt. Similar resistance is emerging in other parts of the country as data centers spread.
"We have now left the 'NIMBY' phase: Not In My Backyard," Republican state Sen. Mark Obenshain said in February 2026, according to The Associated Press. "And we've entered the 'banana' phase: Build Absolutely Nothing Anywhere Near Anything."
Others argue Virginia can sustain its leadership without dismantling incentives altogether.
"Sustaining Virginia's leadership in this industry also depends on addressing the same competitive factors that influence other sectors," wrote Jason El Koubi, president and CEO of the Virginia Economic Development Partnership, in a letter to state legislators dated December 22, 2025."
"This includes working with partners to keep site selection and business costs transparent and predictable, while continuing to invest in essential infrastructure and expanding the skilled workforce—construction professionals, technicians, and technology talent—particularly in regions where interest in data centers is growing."
Not everyone sees a need for change. Republican Sen. Richard Stuart told The Associated Press, "this ain't going to slow this train down one iota."
Other states, meanwhile, are reassessing their own incentives. Minnesota repealed a sales tax break on electricity for major data centers. Washington may keep its exemption for new facilities, but not for existing ones, for upgrading equipment. Illinois Governor JB Pritzker has proposed a two-year pause on data center tax breaks and Arizona Governor Katie Hobbs wants to scrap hers altogether.
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