The data center industry is expanding fast, but the policy environment supporting that growth is changing. Operators who understand where incentives stand today and how to structure them correctly will be better positioned than those who rely on outdated assumptions.
The variables that drive data center site selection have not changed: power availability and cost, fiber connectivity, water access, climate, seismic risk, and tax environment. What has changed is the policy environment surrounding those decisions. States that once offered generous incentive programs to support data center investment are now facing real pressure from citizens and legislators to scale them back. Operators who move forward with clear intelligence on where those programs stand today, and how they are likely to evolve, make better decisions than those relying on outdated information.
Why the Incentive Landscape is Tightening
Data center tax incentives have become one of the most actively debated areas of state tax policy in 2026. At least nine states have already considered repealing data center incentives this year, while lawmakers in 28 states have introduced bills to scale back or modify existing programs.
The drivers are consistent across states: rising electricity costs, community concerns about energy consumption and water use, and growing questions among legislators about whether incentive programs deliver enough value to local residents and taxpayers. These are not fringe concerns. They are showing up in committee hearings, in floor votes, and in the public statements of legislative leaders who previously supported these programs.
This does not mean emerging markets have lost their appeal. Strong infrastructure fundamentals remain where they are regardless of incentive status. It does mean operators need a current and accurate picture of what programs actually look like before committing capital, not what they looked like when a report was last published.
Markets Worth Watching
The markets below offer strong infrastructure fundamentals. Each profile reflects current program status and flags where legislative activity warrants attention. Program terms should always be verified directly before any site commitment is made.
Columbus, Ohio
Columbus checks the infrastructure boxes: abundant low-cost power, major fiber backbone access, and a central location that has drawn consistent data center investment over the past decade.
Ohio’s data center sales tax exemption has historically made the state one of the more attractive destinations for data center investment. That program is now under significant pressure. Ohio Governor Mike DeWine suspended the exemption for new applicants, citing the rising cost of the program and community concerns about energy and environmental impact. The General Assembly is currently weighing legislation that would terminate the exemption entirely. Columbus remains a strong market on fundamentals. Operators evaluating it today need current intelligence on the incentive situation before committing capital.
San Antonio, TX
San Antonio offers access to the ERCOT grid, competitive utility rates through CPS Energy, and a large available workforce. It continues to draw operators looking for an alternative to the congested Dallas-Fort Worth corridor.
The Texas sales tax exemption for qualifying data centers remains on the books today. Operators should not assume it will survive the next legislative session. Texas is losing more than one billion dollars per year on the exemption, and the Senate Committee on Finance is scheduled to hold an interim hearing in July 2026. The committee chair has signaled she may file legislation to repeal the exemption ahead of the 2027 session. We help clients model their long-term tax position under multiple scenarios so they enter the market with a complete financial picture.
Atlanta, Georgia
Atlanta is one of the most fiber-dense markets in the Southeast and draws consistent interest from both hyperscale and enterprise operators. Its position as a major network hub, combined with Georgia’s incentive programs and strong port infrastructure at Savannah, gives it real long-term operational advantages.
Georgia’s sales tax exemption on qualifying data center equipment purchases survived the 2026 legislative session. Growing concern over lost state revenue, however, has given several state leaders pause. The political environment around the exemption has shifted, and operators should treat its continuation in future sessions as uncertain. We help clients moving into Atlanta structure their incentive agreements carefully and stay current on program developments heading into each new legislative session.
Reno, Nevada
Reno is one of the more stable markets for data center operators looking to expand outside of the Bay Area. Nevada’s structural advantages include no corporate income tax, no personal income tax, and a formal abatement program through the Governor’s Office of Economic Development. Qualifying operators can access a personal property tax abatement reducing the rate to 2%, subject to investment and job creation thresholds.
Nevada has not faced the same level of incentive pressure as many other states in 2026. That does not mean operators should assume the environment stays static. It does mean that right now, Nevada offers one of the more predictable incentive environments available.
Omaha, Nebraska
Omaha offers low power costs, geographic centrality along major fiber routes, and a stable regulatory environment. Nebraska’s ImagiNE Act provides a flexible incentive framework that includes refundable tax credits, sales tax exemptions, and property tax relief for qualifying investment projects meeting minimum capital and employment thresholds.
Nebraska has stayed largely outside the data center policy debate that has affected other states in 2026. For operators who want a predictable cost environment without the uncertainty that comes with active legislative scrutiny, Omaha is worth a serious look. Verify current program terms directly with the Nebraska Department of Economic Development before finalizing site decisions.
What to Evaluate Beyond Incentives
Incentives are a starting point, not the whole picture. When we work with clients on data center site selection, we look across a broader set of variables that determine whether a market delivers on its promise over the long term.
Power reliability and grid capacity
We assess each utility’s reliability record, transmission infrastructure, and interconnection queue as part of every site evaluation. A strong incentive package in a market with constrained grid capacity does not produce a viable site.
Labor and utility cost analysis
Utilities and people drive the operating budget. We analyze electricity rate structures and projected power costs, water availability and pricing for cooling, and the local labor market in every site we evaluate, so clients understand the full cost of running a facility, not just the cost of building one.
Fiber diversity and redundancy
Single-carrier markets create operational risk. We identify the carrier landscape in every market we evaluate and flag sites where fiber diversity falls short of what enterprise and hyperscale operations require.
Permitting and entitlement timelines
Time to power drives revenue. We build realistic entitlement timelines into every site comparison so clients understand the actual timeline to operations.
Incentive compliance obligations
Every program we help clients access comes with conditions attached. We map the job creation commitments, capital investment minimums, clawback provisions, and reporting requirements for every agreement before our clients sign anything. There are no surprises after the deal closes.
Long-term tax trajectory
Abatements expire. We model the tax position at year one, year five, and year fifteen. That gives clients a clear view of their true long-term cost structure. The incentive period is only part of the picture.
Legislative monitoring
Incentive programs are moving quickly in 2026. We provide ongoing monitoring so clients stay current on program changes throughout the entire site selection and development timeline, not just at the point of decision.
How KE Andrews Supports Data Center Site Selection
Our site selection and incentives advisory team helps data center operators navigate data center site selection with a full view of the incentive landscape, the tax environment, labor and utility costs, and the compliance obligations attached to every program they consider. We identify available incentives in target markets, model the long-term tax impact of each location, and help operators negotiate and structure agreements that deliver lasting value.
We stay current on legislative and regulatory changes across every market we work in. Operators who partner with us get analysis that reflects what programs look like today, not what they looked like when a report was last updated. We also help clients manage incentive compliance after the agreement is signed, so the savings they committed to deliver actually show up on the bottom line.
Use our Business Location Analyzer to compare markets across the variables that matter most for your project. Then contact our team to discuss your site selection strategy and the incentive opportunities available in your target markets.