More than 100 rural data centers could qualify for new federal tax break

WIRED's Power Play column, written by senior writer Molly Taft, reports that a new tax windfall takes effect on January 1 that could benefit scores of rural data center projects. Under the opportunity zone program, as expanded by the One Big Beautiful Bill Act, projects sited in tracts of rural land will be newly eligible for a set of specific corporate tax benefits. Ways and Means Committee chair Jason Smith said last year that the new rules "may significantly lower barriers for large-scale, capital-intensive projects in rural areas", most notably hyperscale data centers, and that the economic case for building them in designated rural opportunity zones "becomes far more compelling".

The program was proposed by a bipartisan group of lawmakers during the first Trump administration. It offers tax benefits to companies that build in certain low-income census tracts. Last year's bill changed it to attract more investment to rural areas. The government estimates the expansion to rural areas will cost $40.9 billion over the next decade.

Researchers at the Searchlight Institute, a public policy think tank, compared the locations of data center projects in development with the rural census tracts eligible under the new rules. WIRED exclusively reviewed that research and found more than 100 data centers in various stages of development in rural areas that could be eligible. Searchlight used a very conservative database of under 700 planned or under-construction projects, while other datasets put the number in development in the US at closer to 1,500, so the true number of eligible projects is likely higher. Separate Pew research found that just 13 percent of operating data centers are in rural areas, but around 67 percent of planned facilities are going rural.

Being in a rural opportunity zone does not automatically bring the benefits: the company has to create a specialized investment vehicle to start the process. The tax break can be considered confidential IRS data, so it is next to impossible to know which companies pursue it unless they disclose it voluntarily.

WIRED asked Meta, Amazon, Microsoft and Google, all of which are developing data centers in areas that could be eligible, about their plans. Microsoft, Meta and Amazon all denied using the program. Microsoft's general counsel of infrastructure legal affairs, Rima Alaily, said the company "does not use the opportunity zone program to invest in the purchase or construction of its data centers." Amazon spokesperson Julia Lawless said the company "does not actively seek out" land in opportunity zones, has not claimed the tax benefit for its projects, has not used the program for site selection and has no plans to add it to its criteria. Google did not respond.

Taft notes that builders have many reasons to go rural, from escaping community opposition to cheaper land, but companies with lower profiles than Microsoft or Amazon may still opt in. Nathan Jensen, a government professor at the University of Texas-Austin, said he would be "very surprised" if some companies were not considering rural opportunity zones when siting, and called the benefit "essentially free money".

Experts warn that results for rural communities could be mixed. Emily Kraschel, a tax policy analyst at Searchlight, says the only requirement for the benefits is capital investment, which does not guarantee jobs or a local economic boost. That is more certain with a traditional factory than with a data center. Nothing requires opportunity zone projects to create jobs; the assumption is that they will by being in the community. Jensen says that does not always hold for storage facilities and warehouses, which have been popular choices in opportunity zones. Data centers may create construction jobs in the short term, but whether they build a lasting workforce is debated. There is also some evidence the program has done little to drive investment to disadvantaged areas and that many of its projects would have happened anyway.

The politics are heated. Backlash against data centers, including from rural and Republican voters, is at a fever pitch. Last month Senator Josh Hawley introduced legislation that would eliminate opportunity zone funding for data centers, saying it would help "ensure Big Tech companies don’t get tax breaks to build data centers on farmland." The column also cites a New York Times report that Meta is writing off data center equipment under a federal tax break intended for research and experimentation, and Amazon's recent attempt to negotiate a lower tax bill on one of dozens of Mississippi data centers it plans to open.

In the column's news section, Taft adds that on Friday Amazon announced commitments in communities where it builds data centers: $1 billion over five years for initiatives such as free community college programs, and confirmation that it no longer uses nondisclosure agreements with public officials there. The reading list also mentions a new bipartisan permitting bill with implications for data centers, a failed Senate bill echoing the White House's Ratepayer Protection Act, a Pennsylvania data center that still faces local opposition after offering residents $10,000 each, and a new tool from Sustainable AI Group that estimates data center energy use and carbon emissions.

Key facts

From January 1, rural data center projects become newly eligible for opportunity zone corporate tax benefits under the program as expanded by the One Big Beautiful Bill Act.
Searchlight Institute research reviewed exclusively by WIRED found more than 100 data centers in development in rural areas that could be eligible, using a conservative database of under 700 projects; other datasets count closer to 1,500 in development.
Microsoft, Meta and Amazon denied using the program, and Google did not respond; the benefit can count as confidential IRS data, so claimants are hard to identify.
The only requirement is capital investment, with no job-creation requirement; the government estimates the rural expansion will cost $40.9 billion over the next decade.
Senator Josh Hawley introduced legislation last month to eliminate opportunity zone funding for data centers.

Why it matters

Tax treatment is becoming a central front in the fight over data centers. The expansion makes building in rural opportunity zones more attractive just as Pew finds around 67 percent of planned facilities going rural, against 13 percent of those operating today. The same week's column notes that tax breaks for data centers built by powerful companies have become a flashpoint in the broader backlash, with Hawley already moving to cut off opportunity zone funding for them.

Who it affects

Data center developers choosing sites, especially companies with lower profiles than Microsoft or Amazon, who Taft says may be more likely to opt in. Rural communities are also affected: experts warn the results could be mixed, because the benefit depends on capital investment rather than on jobs. Taxpayers carry the estimated $40.9 billion cost of the rural expansion over the next decade. Lawmakers weighing the Hawley bill are affected too.

How to use it

This is a tax rule, not a product, but the mechanics matter. A project in a rural opportunity zone does not get the benefits automatically; the company has to create a specialized investment vehicle to start the process. The only requirement for the benefits is capital investment. Site selection criteria such as available land and access to talent can line up with eligible tracts, as Amazon's spokesperson put it, without the tax benefit being the reason for choosing a site.

How solid is it

The eligibility finding rests on Searchlight Institute research that WIRED reviewed exclusively, comparing project locations with eligible rural census tracts. The 100-plus figure is described as conservative because the database held under 700 projects, while other datasets put projects in development at closer to 1,500. The company denials come from statements to WIRED; Meta's own statement is not quoted, and Google did not respond. Claims about the program's weak record come as "some evidence" in the column, not as settled findings.

Risks and caveats

No company is shown to have actually claimed the opportunity zone benefit for a data center, and the source does not say how many of the 100-plus projects will claim it. The tax break can be considered confidential IRS data, so it is next to impossible to know who is claiming it unless they disclose it. The article gives no figure for the benefit per project. Eligibility is not the same as use, and the column is a news-and-analysis piece with experts' views, not a count of actual claims.

“It’s essentially free money”

— Nathan Jensen, government professor at the University of Texas-Austin, on rural opportunity zone benefits