Emerging from the Great Recession, Nevada leaders sought to revitalize the state’s economy, and identified data centers as a potential path forward.
Data Center Incentives in Nevada: A Decade Later
In 2015, Nevada lawmakers approved a bill to significantly reduce sales and personal property taxes for data centers, hoping to attract this growing industry. Steve Hill, then director of the Governor’s Office of Economic Development (GOED), stated the bill was “a exceptionally critical step in making sure that Nevada is one of those locations where the cloud is housed,” and would bring jobs and industry to the state.
More than a decade later, as data centers increasingly fuel the artificial intelligence boom, debate continues over whether the $457 million in projected tax abatements granted over the past decade have been a worthwhile investment.
Supporters point to companies like Google and Switch as examples of how data centers have spurred employment in Northern Nevada and generated property tax revenue for local governments. Austin Osborne, Storey County manager, noted that despite the tax abatements, these companies “do bring in revenue for the county and for the state of Nevada.”
However, opponents emphasize that data centers themselves do not create a large number of jobs—the state’s incentive program requires companies to employ either 10 or 50 people, and the $457 million in incentives promised only about 300 jobs. Concerns as well exist regarding the significant energy and water usage required by these facilities. Michael Hicks, a professor at Ball State University, pointed out, “You’re getting … a substantial electricity user, a big water user that offers 10 jobs.”
Transparency is also an issue. The state does not track tax revenue or overall economic activity tied to these companies, relying instead on projections made when the tax relief was initially approved—estimated at $1 billion in new tax revenues and $6.6 billion in economic activity. While the state monitors job creation, data is limited to one abated company.
An analysis found that over the past eight years, local governments have missed out on more than $537 million in sales and use tax revenues due to the incentives. A 2023 analysis indicated that Nevada data centers—including those without abatements—employed 4,550 people and generated $290 million in state and local tax revenues.
Nevada is one of 38 states offering data center tax incentives, but some states are reconsidering these programs. Bills have been proposed in Georgia, Washington, and Connecticut to curtail future incentives, and a dispute over a similar program recently stalled Virginia’s budget process. Nicholas Miller, a fiscal policy associate at the National Conference of State Legislatures, noted that “States are not looking to completely undo the incentive, but they are seeking an off-ramp.”
Frequently Asked Questions
What information does the state use to evaluate the data center incentive program?
The state relies on reports released every two years by GOED, which contain information from audits of the data center companies, including jobs created, wages, and capital expenditures. However, these reports do not include all audit information.
How much have local governments lost in sales and use tax revenue due to the data center abatements?
Across the past eight years, local governments missed out on more than $537 million in sales and use tax revenues because of the incentives, according to an analysis by the Nevada Independent.
What do union leaders say about the impact of data centers on employment in Northern Nevada?
Union leaders report that data center construction has fueled significant growth in employment for their members, with the International Brotherhood of Electrical Workers Local 401 currently having 4,000 electricians working in the field, 80 percent of whom are on data center projects.
As Nevada continues to attract data centers, questions remain about the long-term economic and environmental consequences of these incentives. Will the state find a balance between attracting investment and ensuring that the benefits are broadly shared?
