Computing

Rural Data Centers Face New Federal Tax Breaks

A newly expanded federal program under the One Big Beautiful Bill Act is set to grant corporate tax benefits to rural data center projects starting next year, despite mixed expert reactions and reluctance from major tech firms.

Radwan AbdulhadiEditor and technology writer

Published: October 4, 2026 · Updated: October 4, 2026 · 4 min read

Rural Data Centers Face New Federal Tax Breaks — Image: WIRED

New Tax Windfall for Rural Projects

Starting on January 1, a new tax windfall will kick in that could benefit scores of rural data center projects thanks to the One Big Beautiful Bill Act. Projects sited in tracts of rural land across the country will be newly eligible for a set of specific corporate tax benefits under an expanded program.

The legislative changes were highlighted in a statement from Ways and Means Committee chair Jason Smith, who noted that the economic case for building facilities in designated rural opportunity zones becomes far more compelling under the new rules. The changes may significantly lower barriers for large-scale, capital-inescentive projects, most notably hyperscale data centers.

Research Tracks Eligible Rural Data Centers

Emily Kraschel, a tax policy analyst at the Searchlight Institute public policy think tank, warns that the results for rural communities could be mixed. According to Kraschel, the only requirement to get the benefits is capital investment, which does not automatically guarantee local job creation or a direct economic boost compared to traditional factories.

Researchers from Searchlight compared the locations of data center projects in development with rural census tracts eligible for the new program. WIRED exclusively reviewed this research and identified more than 100 data centers under various stages of development in rural areas that could potentially qualify.

Searchlight utilized a conservative database of under 700 planned or constructing facilities, though other datasets estimate closer to 1,500 developments nationwide. This trend aligns with separate Pew research showing that while only 13 percent of operating facilities are located in rural areas, around 67 percent of planned facilities are going rural.

Industry Backlash and Legislative Scrutiny

The research arrives as public backlash against data centers reaches a fever pitch among rural and GOP voters. Tax breaks for facilities built by powerful global corporations have become a central flashpoint, highlighted by instances such as Amazon negotiating for a lower tax bill in Mississippi and Meta writing off equipment under federal tax breaks intended for research and experimentation.

Lawmakers have taken notice of the industry's intersection with opportunity zones. Senator Josh Hawley introduced legislation last month that would eliminate opportunity zone funding for data centers, aiming to ensure that Big Tech companies do not secure tax breaks to build facilities on farmland.

Tech Giants Distance Themselves From Program

While qualifying for opportunity zone benefits requires companies to create a specialized investment vehicle, the confidential nature of IRS data makes it difficult to track participants unless they voluntarily disclose their status. High-profile firms have sought to distance themselves from the program.

When contacted by WIRED regarding potential eligibility, representatives for Meta, Microsoft, and Amazon denied utilizing the opportunity zone program. Microsoft general counsel of infrastructure legal affairs Rima Alaily stated that the company does not use the program to invest in data center purchases or construction.

Amazon spokesperson Julia Lawless echoed those sentiments, stating that the company does not actively seek out land in opportunity zones and has not claimed the tax benefit for its projects. Google did not respond to requests for comment.

Economic Questions and Future Outlook

Despite denials from major hyperscalers, academic experts believe smaller or lower-profile developers may opt into the available tax advantages. Nathan Jensen, a government professor at the University of Texas-Austin, noted he would be very surprised if some builders were not factoring rural opportunity zones into their site selection decisions.

Execution of the opportunity zone program has faced mixed results historically, with evidence suggesting that many federally backed projects would have proceeded without tax incentives. Government estimates project the rural expansion will cost approximately $40.9 billion over the next decade.