(The Center Square) – A new legislative review estimates that Virginia’s data center tax break generated 22 cents in state tax revenue for every dollar companies saved.

Staff for the Joint Legislative Audit and Review Commission presented the findings Monday. The report estimates that data centers saved an average of $811.5 million a year from fiscal 2021 through 2025.

Researchers estimated that the business activity the tax break attracted generated $179.4 million a year in state taxes, leaving a difference of $632.1 million a year. The revenue estimate excludes local taxes, including property taxes that cities and counties collect from data centers.

The exemption lets qualifying data center operators and tenants buy computer equipment and software without paying sales and use tax.

Five years of savings from that one tax break accounted for 60% of the $6.8 billion in tax breaks, grants and other business incentives the commission counted over a decade.

To figure out what Virginia got back, researchers had to estimate how much data center business would have come to the state anyway. Earlier reviews assumed the tax break drove at least 90% of data center location and expansion activity in Virginia.

The new review puts that share at about half. It draws on research into how sales and use tax exemptions affected the number, square footage and energy use of data centers across states.

The Virginia Economic Development Partnership said in an Oct. 28 letter that the change had a substantial effect on the estimates. The partnership urged the commission to explain how much its findings depend on that assumption and to keep evaluating its method as more Virginia-specific evidence becomes available.

The commission estimated that the exemption supported about 18,100 private-sector jobs a year, including jobs at businesses that supply data centers. It also estimated that the exemption added about $3.9 billion a year to Virginia’s gross domestic product over those five years.

A Senate proposal to end the sales tax exemption early helped stall state budget talks this spring. Lawmakers kept the exemption in place in June and added a separate tax on electricity used by data center operators.

The electricity tax took effect July 1 and runs through June 30, 2028. The state budget caps deposits from the tax into Virginia’s general fund at $600 million per fiscal year.

Lawmakers are still split over the exemption. At an Oct. 26 meeting, Senate Finance Chairwoman Louise Lucas, D-Portsmouth, backed repealing it. House Appropriations Chairman Luke Torian, D-Prince William, urged the state to honor its commitments to the industry while addressing the effects of data center growth on communities.