Microsoft, Amazon and Meta disown the rural data-center tax break that starts Jan. 1

On January 1, data center projects in rural opportunity zones, low-income census tracts where Washington gives investors tax breaks for putting money in, become eligible for a federal benefit expanded by last year’s One Big Beautiful Bill Act. Research from the Searchlight Institute, reviewed exclusively by Wired, found more than 100 rural data centers in development that could qualify.

That count comes from a conservative database of under 700 planned or under-construction projects. Other datasets put U.S. data centers in development closer to 1,500, so the eligible number is likely higher. Pew research finds that while 13% of operating data centers sit in rural areas, about 67% of planned ones are headed there.

The program started under the first Trump administration as a bipartisan idea, and the new law opened it wider to rural projects. Ways and Means chair Jason Smith said last year the rules “may significantly lower barriers for large-scale, capital-intensive projects in rural areas,” naming hyperscale data centers, the warehouse-sized computing campuses that run AI, as the leading example.

The only test is money in the ground. There’s no requirement to create jobs; the assumption is that a project creates them by showing up. “You’d be more sure of that with a more traditional factory that requires lots of workers,” says Searchlight tax analyst Emily Kraschel. “But with a data center, that assumption goes a little wonky.” A server campus brings construction jobs for a while, and whether it leaves a lasting workforce behind is still argued over.

Wired asked Meta, Amazon, Microsoft and Google, all building in areas that could qualify, whether they plan to take the break. Microsoft, Meta and Amazon denied using the program. Microsoft’s Rima Alaily said the company “does not use the opportunity zone program to invest in the purchase or construction of its data centers.” Amazon’s Julia Lawless said it hasn’t claimed the benefit and has “no plans to add it to our criteria.” Google didn’t respond.

Each of those statements covers that company’s own claims. None can speak for everyone else building AI capacity in rural America, and the program is built so everyone else stays out of view. A company has to set up a special investment vehicle to get the break, and because the benefit can count as confidential IRS data, outsiders mostly learn who’s using it only when the company volunteers it. UT-Austin’s Nathan Jensen would be “very surprised” if some companies weren’t weighing rural opportunity zones when they pick sites. “It’s essentially free money.”

Backlash against data centers, including from rural and Republican voters, is running hot this midterm season. Last month Sen. Josh Hawley introduced a bill to strip opportunity zone funding from data centers, to “ensure Big Tech companies don’t get tax breaks to build data centers on farmland.” Jensen finds it “interesting we have this program that’s incentivizing an investment while states are trying to de-incentivize or even ban it.” The government estimates the whole rural expansion will cost $40.9 billion over the next decade.

With the biggest names saying no, the break will most likely be collected by developers with lower profiles than Microsoft or Amazon, through investment vehicles the IRS keeps confidential, in an election year when rural voters are asking hardest who is getting paid to build next door.

Sources

• Wired: Rural Data Centers Are in for a Big Federal Tax Break
• Pew Research Center: Most new data centers in the US are coming to rural areas
• House Ways and Means Committee: Rural America rebound on the horizon with new opportunity zone incentives
• Sen. Josh Hawley: Legislation to strip opportunity zone tax breaks for data centers
• Joint Committee on Taxation: JCX-35-25