Illinois Governor JB Pritzker has paused state tax incentives for data centers, following legislative inaction on proposals to address their energy consumption's impact on utility bills. This mirrors a similar move in Ohio and reflects growing U.S. opposition to data center projects.
The pause on data center tax credits highlights a growing tension between the demand for digital infrastructure and concerns over its environmental and economic impact on local communities, potentially redirecting significant investment and jobs to other states.
Illinois Governor JB Pritzker has issued an executive order pausing state tax incentives for data centers, citing the legislature's failure to address concerns about their significant energy consumption and its impact on local utility bills. Pritzker had sought to increase electricity rates for data centers, but the proposal stalled in the legislature. The governor intends to revisit the issue during the veto session in November.
This action mirrors Ohio, where Governor Mike DeWine also paused data center tax incentives pending an economic impact study. The pause in Illinois occurs amidst a broader trend of growing opposition to data center developments across the U.S., with an estimated $64 billion in projects reportedly delayed or canceled due to community concerns over increased water and energy costs. In Illinois, the Naperville city council previously rejected a proposed data center in January.
The governor's decision has drawn criticism from organized labor groups like Climate Jobs Illinois. These unions, a key Democratic constituency, support the tax breaks for the jobs they create in constructing data centers. They argue that the pause will not lower utility bills but will instead divert investment and jobs to neighboring states such as Indiana, Kentucky, and Ohio. The executive order exempts data center agreements established before July 1, and companies can still pursue local tax relief. Between 2020 and 2024, Illinois provided nearly $1 billion in state tax incentives for data centers, attracting over $15 billion in investments.