Virginia Democrats are proposing to end a data center tax exemption that has cost the state billions, marking a significant shift in the state's approach to its tech industry. The Senate budget plan would allow the exemption to expire in January 2027, generating over $1 billion in new revenue.

The exemption, which has been in place since 2010, is credited with fueling Virginia's dominance in the data center market, where the state hosts 35% of global facilities. Senate Finance Chair Louise Lucas argues the exemption has provided a "blank check" to wealthy corporations while families struggle with basic needs. The state's Joint Legislative Audit and Review Commission estimates data centers have avoided $2.7 billion in taxes over the past decade.

The Data Center Coalition warns the move would "effectively halt investment" in Virginia, potentially costing the state $1.3 billion in lost tax revenue and threatening tens of thousands of jobs. The Senate's budget totals $74.1 billion in general funding, compared to the House's $71.5 billion proposal. Both chambers are with their respective plans, which will need reconciliation before final approval.