Rural data centers could win a new federal tax break starting January 1

By VK

Published 5 Oct 2026, 12:12 UTC

Reporting from WIRED

An expanded opportunity zone program from the One Big Beautiful Bill Act takes effect in January, and research reviewed by WIRED finds more than 100 rural data center projects that could qualify.

What it means for founders

For data center developers, GPU cloud providers and energy startups building in rural areas, the program could meaningfully lower the cost of capital. Get tax advice before choosing sites.
Expect scrutiny. Claiming a break with no jobs test invites local opposition, and the largest companies are already distancing themselves from it.
More rural capacity could ease compute prices over time, but only if projects survive local politics and grid limits.
Watch Hawley's bill and the January start date. Any change to eligibility would shift where new capacity gets built.

The story

A tax break meant to lift struggling rural areas may end up subsidizing the AI buildout. From January 1, an expanded version of the federal opportunity zone program opens corporate tax benefits to projects in designated rural tracts, and data centers look like some of the biggest potential winners.

The program

Opportunity zones date from the first Trump administration and give tax advantages to investors who put capital into projects in low income census tracts. Last year's One Big Beautiful Bill Act widened the program to draw more money to rural areas. House Ways and Means chair Jason Smith said at the time that the changes could lower barriers for large, capital heavy projects such as hyperscale data centers. The government estimates the rural expansion will cost $40.9 billion over the next decade.

The main test for the benefit is capital investment. There is no requirement to create jobs, which matters for data centers: they employ many people during construction but relatively few once they are running.

How many projects could qualify

The Searchlight Institute, a policy think tank, compared a conservative list of fewer than 700 planned or under construction data centers with the newly eligible rural tracts. WIRED, which reviewed the research exclusively, found more than 100 projects that could qualify. Other datasets put the number of US data centers in development closer to 1,500, so the real count is probably higher. Pew research shows why: about 13 percent of operating data centers are rural, but roughly two thirds of planned ones are.

Sitting in a zone does not trigger the benefit automatically. A company has to set up a dedicated investment vehicle, and because the tax records are confidential, it is hard to know who claims the break unless they say so.

Big names step back

WIRED asked Meta, Amazon, Microsoft and Google about their plans. Microsoft, Meta and Amazon said they do not use the program, and Amazon said any overlap with eligible tracts reflects its normal site selection. Google did not respond. Experts expect lower profile developers to be less shy, and University of Texas government professor Nathan Jensen said he would be very surprised if no companies were weighing the zones when choosing sites.

The timing is awkward. Opposition to data centers is growing, including among rural and Republican voters, and tax breaks have become a flashpoint. Senator Josh Hawley introduced a bill last month to strip opportunity zone benefits from data centers. Meanwhile, some states are trying to discourage or restrict the very projects the federal program now rewards.

What we don't know yet

It is not known which companies will claim the benefit, how much a typical project could save, or whether Hawley's bill or new Treasury guidance will narrow eligibility before January.