After promises last legislative session that HB 2014, the so-called Power Generation and Consumption Act, would make West Virginia “the most attractive state in the country for data centers“, lawmakers are back with a new package of tax incentives for data centers (along with manufacturers and other big corporations). HB 4013 would give major tax cuts to these big industries by allowing them to dramatically reduce or even eliminate their state tax liability by deducting most of their costs from their tax bill including capital investments, construction costs, and employee wages. Policymakers have seen an upswell in pushback from community members all over West Virginia raising concerns about data centers’ impact on noise and light pollution, water consumption, and electricity costs. What is clear is that these big developers use (and even degrade) lots of our public services: roads, infrastructure, emergency response, water, and electricity. Enacting huge tax giveaways means they get to benefit from these public services without paying into them like residents and small businesses do.
What’s more, it’s unclear how HB 4013 squares with the promises and priorities of 2025’s HB 2014. In that legislation, lawmakers sought to bolster state revenues by seizing the property tax revenue data centers generate, which normally go to local public services and school districts, and instead diverting it to a state fund to help replace the state’s income tax, among other priorities. But with this bill, they’d be undercutting state revenues, slashing the same taxes that fund our state budget.
HB 4013 creates a new business tax incentive, targeting new warehouse and distribution centers, manufacturers, research and development facilities, regional or national business headquarters, air transportation, repair, or maintenance facilities, ship or barge transportation, repair, and/or maintenance facilities, telecommunication centers, and data centers, as well as the expansion of existing facilities. Businesses creating at least 10 new jobs and/or investing $2.5 million in West Virginia can qualify for the tax credits. Capital investment, construction costs, and employee wages can all be used to offset state taxes, including state income taxes, sales and use taxes, business franchise taxes, and payroll withholding taxes. With a large enough investment, such as with a data center, the credit could potentially offset all state taxes.
The total tax credit is calculated by totaling a percentage or share of several different inputs. Qualified developments could get a tax credit against:
The credit can be spread over 10 years, and its size could quickly reach tens of millions of dollars for a single site, particularly for data centers valued in the billions.
Take a hypothetical example of a data center with a $2 billion value in machinery and equipment, and suppose the construction costs were $200 million. 7 percent of the $2 billion value would equal a tax credit of $140 million, just on the machinery. An additional $4 million tax credit would be available based on 2 percent of the construction costs.
If the data center employs 25 workers full-time, with an average wage of $100,000 per year with at least 50 percent of benefits paid for by the business, the data center would qualify for an additional credit of 30 percent of the average wage multiplied by the number of full-time employees. In this hypothetical example, the credit would equal $750,000.
In this hypothetical example, just one data center would qualify for a nearly $145 million tax credit. For comparison, total corporate net income taxes for all businesses in West Virginia are an estimated $274 million for FY 2027.
West Virginia already has a number of existing business tax incentives costing the state millions each year in forgone revenue, while promised jobs and economic benefit nearly always fail to materialize. Instead of giving away even more tax cuts for businesses that are already looking to locate in the state, West Virginia should be investing in its workforce, infrastructure, and quality of life, all of which will make the state more attractive to businesses in a more effective way than more tax incentives.
