Rural data centers could qualify for expanded opportunity zone tax benefits

Expanded rural eligibility

The One Big Beautiful Bill Act expanded the opportunity zone program so projects in eligible rural tracts can newly qualify for specified corporate tax benefits starting next year. The new rules are scheduled to kick in on January 1. The program, created during the first Trump administration, offers tax benefits for projects in certain low-income census tracts.

Ways and Means Committee chair Jason Smith said the changes may significantly lower barriers for large-scale, capital-intensive rural projects, most notably hyperscale data centers. A WIRED review of research by Searchlight Institute found more than 100 data centers in various stages of development in rural areas that could be eligible. Searchlight used a conservative database of fewer than 700 planned or under-construction projects, while other datasets place the number of US data centers in development closer to 1,500. Pew research found that 13 percent of operating data centers are rural, compared with around 67 percent of planned facilities.

Investment without a job guarantee

Eligibility does not automatically provide benefits. A company must create a specialized investment vehicle, and tax breaks can be treated as confidential IRS data, making it difficult to identify participating companies unless they disclose them. Capital investment is currently the only requirement, but analysts warn that it does not guarantee jobs or a local economic boost. Data centers may create construction jobs, but their ability to create a lasting workforce is debated.

The program has produced mixed results, with some evidence that it has done little to drive investment to disadvantaged areas and that some projects would have proceeded without the tax boost. The government estimates that expanding opportunity zones to rural areas will cost $40.9 billion over the next decade. University of Texas-Austin professor Nathan Jensen said lawmakers need to decide whether the goal is capital investment, moving data centers away from population centers, or jobs.

Companies and political pressure

Microsoft, Meta and Amazon are developing data centers in potentially eligible areas, but each denied using the opportunity zone program. Amazon said it does not actively seek land in opportunity zones and has no plans to add the benefit to its site-selection criteria. Google did not respond to WIRED's inquiry. Jensen said he would be very surprised if some lower-profile data center companies were not considering the tax benefits when choosing sites.

Tax breaks for major technology companies have become a major focus of rural and GOP opposition. Amazon recently sought a lower tax bill for a planned Mississippi data center, while The New York Times reported that Meta was writing off equipment under a separate federal research and experimentation break. Senator Josh Hawley has introduced legislation that would eliminate opportunity zone funding for data centers, arguing that it would prevent Big Tech companies from receiving tax breaks to build on farmland.

Amazon also pledged $1 billion over five years for community initiatives near its data centers, including free community college programs, and confirmed that it is no longer using nondisclosure agreements with local officials. The announcements came as data center development faced public opposition and state efforts to limit or ban projects.