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Start with the public cost, not the headline investment
Identify which taxes are reduced or exempted, which purchases qualify, which government gives up the revenue, and how long the incentive lasts. Compare estimated savings with actual claims when both are available. A stated project investment is not itself a public cost, and a tax benefit’s nominal value can differ depending on eligible spending, tax rates, and program duration.
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For each year, seek the estimated or claimed tax savings, the state and local shares, the eligible activity, and the calculation method. Keep projections separate from realized claims. If a report estimates savings using assumed tax rates or inferred purchases, label the figures as estimates rather than audited totals.
Test whether reported benefits were caused by the incentive
Investment, jobs, and tax receipts that occur after a company receives an incentive do not by themselves show that the incentive produced them. Ask what activity would likely have happened without the tax break, and whether the analysis can distinguish new activity from routine spending or investment already planned.
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Washington’s Joint Legislative Audit and Review Committee (JLARC) illustrates the attribution problem. In its 2026 review of an urban-county sales and use tax exemption for servers and power infrastructure, JLARC estimated $42.4 million in combined savings to owners and tenants over fiscal years 2023–2026: $4.1 million in FY2023, $10.3 million in FY2024, $13.4 million in FY2025, and $14.6 million in FY2026. The review inferred eligible equipment purchases of $40.6 million in FY2023 and $141.7 million in FY2026 from estimated tax savings and a combined state and local tax rate just over 10%. JLARC could not determine how much of that spending occurred because of the preference; server replacement purchases might have happened anyway. Read the Washington JLARC review.
Count construction and permanent jobs separately
Construction employment is temporary; operations jobs may be ongoing. A useful comparison reports each category separately, along with wages, full-time status, job duration, retention, local hiring where relevant, and whether an independent agency verified the numbers. Do not combine short-term construction roles with permanent positions into one jobs total.
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In the Washington review, beneficiaries reported nearly 300 temporary construction jobs and 53 permanent family-wage jobs. JLARC noted that the state Department of Revenue had not verified those job counts. That qualification matters: a beneficiary-reported number and an independently checked outcome are not equivalent evidence.
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A tax exemption can reduce one government’s receipts while a facility increases assessed property value and property-tax collections for local governments. Compare both sides, identify which jurisdiction receives each revenue stream, and avoid treating a local gain as proof that the overall incentive paid for itself.
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JLARC reported at least $111 million in added assessed value and $1.2 million in property taxes across two Washington counties. Those figures are relevant local fiscal outcomes, but they do not establish that the tax preference caused the facilities or the added value.
Also ask who pays for electricity, water and sewer capacity, grid connections, and other infrastructure needed to serve a project. Georgia’s Department of Audits and Accounts (DOAA), in a 2025 summary, flags possible short-term strain on electric-grid and local water and sewer infrastructure as data centers grow. The summary does not provide a universal dollar estimate for those pressures, so local utility and infrastructure evidence is needed to assess a particular project. See Georgia DOAA report summaries.
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Check whether promises can be enforced
Investment thresholds and job commitments are meaningful only when the program defines how they are measured, requires reporting, and provides consequences for falling short. Examine certification rules, audit timing, job-retention checks, program expiration, and any clawback or recapture mechanism.
Texas provides an example, but its standard qualifying-facility rules should not be confused with its separate rules for qualifying large data-center projects. Under the standard program described by the Texas Comptroller, the sales-tax exemption covers the 6.25% state portion; applicable local sales and use tax is still collected. Depending on capital investment—at least $200 million or $250 million within five years—the standard program lasts 10 or 15 years. The Comptroller audits at the five-year anniversary, reviews job retention, and may revoke certification and recover tax with penalty and interest if commitments are not met. The separate large-project rules have their own thresholds, exemption terms, 20-year period, audit and job-retention provisions, and revocation consequences. Check the Texas Comptroller’s current data-center guidance.
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Use comparable reporting categories—and date every program claim
State programs differ, and their terms can change. A comparison should name the jurisdiction and the date or fiscal years covered rather than presenting one state’s rules as a national standard. JLARC’s 2026 review counted at least 38 states offering preferential tax treatment specifically targeting data centers; that is the report’s count for 2026, not a timeless total.
Virginia’s 2026 reporting requirement offers a useful checklist of information to request: qualifying expenses claimed, total tax benefit, return-on-investment analysis covering direct and indirect jobs, and state and local tax revenues. Those categories help organize a comparison, but they do not by themselves establish causation or account for every community cost. See Virginia’s data-center tax exemption information.
Program status also needs a date. Illinois’ Department of Commerce and Economic Opportunity says it stopped processing applications for its data-center incentive beginning July 1, 2026, following a June 5, 2026 gubernatorial directive. The published terms included at least $250 million in investment over 60 months, 20 qualifying full-time jobs paid at least 120% of the county median, and carbon-neutral or green-building requirements; tax exemptions and, for projects in underserved areas, a construction-worker wage credit were also part of the program. Those terms describe the published program, not an invitation for new applications. Check Illinois DCEO’s data-center program page.
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Quick Recap
What to request for a local proposal
- Projected and actual annual tax savings, broken down by tax type and state or local share.
- Eligible purchases, the tax rates used in estimates, and the difference between projected savings and claims.
- Construction jobs and ongoing jobs reported separately, with wages, duration, retention, and verification method.
- Investment and hiring commitments, reporting requirements, audit schedule, expiration date, and recapture terms.
- State and local tax revenues, including property taxes, with the receiving jurisdiction identified.
- Project-specific estimates or evidence for power, water, sewer, grid, and other infrastructure needs and who bears the costs.
- An explanation of what investment and employment would likely occur without the incentive.
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