US rural data centers gain access to expanded federal tax breaks

A wider map of eligible projects

The Opportunity Zones program was created by a bipartisan group of lawmakers during Donald Trump’s first administration. It offers tax benefits to companies investing in designated low-income census tracts. Last year, the One Big Beautiful Bill Act changed the program to draw more investment into rural areas.

Searchlight Institute researchers matched data-center locations against rural census tracts that qualify under the revised rules. WIRED reviewed their study, which identified more than 100 data centers at different stages of construction that could qualify.

That may be a conservative count. Searchlight’s database included fewer than 700 planned or under-construction projects, while other datasets put the US development pipeline at about 1,500. A separate Pew study found that just 13 percent of operating data centers are in rural areas, compared with about 67 percent of planned facilities.

The potential expansion lands amid growing opposition to data-center construction, including in rural communities and among Republican voters. Tax breaks for projects by major companies have become part of that debate. Amazon recently drew attention for trying to negotiate a lower tax bill for one of dozens of data centers it plans to open in Mississippi. Last week, The New York Times reported that Meta was depreciating data-center equipment under a federal tax break intended for research and experimentation.

Congress is taking notice, too. Last month, Senator Josh Hawley introduced a bill to bar data centers from receiving Opportunity Zone funding. He said he wanted to prevent tax breaks for large technology companies building on agricultural land.

Who takes the break is hard to see

A data center’s location in an eligible rural zone does not automatically qualify its operator for the tax benefit. The company must first establish a special investment structure. And because tax-benefit information may be confidential IRS data, it is difficult to identify which companies are pursuing the incentives unless they disclose it.

Searchlight’s study names large companies that could benefit. WIRED asked Meta, Amazon, Microsoft and Google whether they planned to use the program. Microsoft, Meta and Amazon said they do not. Google did not respond.

Microsoft’s infrastructure general counsel, Rima Alaily, told WIRED that the company does not use the program to buy or build data centers. Amazon spokesperson Julia Lawless said the company does not specifically seek sites in Opportunity Zones or claim the benefit for its projects. If Amazon builds in one of those areas, she said, it is because the site meets the company’s criteria, including land availability and access to skilled workers. She added that Amazon did not use the tax break when selecting sites and does not plan to include it in future site decisions.

Companies may choose rural locations for other reasons, such as cheaper land or less local opposition. But Nathan Jensen, a professor of public policy at the University of Texas at Austin, said he would be very surprised if companies did not consider rural Opportunity Zones when evaluating sites.

The incentive is clearer than the payoff

The case for the program is straightforward: tax advantages encourage investment in communities that need it. The results of Opportunity Zones, however, are mixed. Some evidence suggests the program did little to direct investment to disadvantaged areas, and many federally supported projects might have happened without the tax breaks. The US government estimates that extending the program to rural areas will cost $40.9 billion over the next decade.

The rules do not require projects to create jobs. Instead, they assume investment will benefit the surrounding community. That assumption is harder to make for facilities such as warehouses and storage sites, Jensen said. Data centers may create jobs during construction, but whether they provide substantial long-term employment remains disputed.

Searchlight tax policy analyst Emily Krassel said lawmakers need to decide what they want the investment to accomplish: move data centers away from densely populated areas, attract capital or create jobs. Those are different goals, and the program does not make clear which one it is paying for.

I think that is the gap in the announcement: the eligibility rules make it easier to direct capital toward rural sites, but they do not establish what a community should expect in return. Jensen also finds it notable that a federal program is encouraging data-center investment while some state governments are trying to make such projects less attractive or even ban them. The result could be a subsidy for facilities whose local value remains contested—and whose use of the subsidy may be hard to track.

More from the data-center beat

Amazon said Friday that it would invest $1 billion in initiatives for communities where it builds data centers over the next five years, including free college training programs. The company also confirmed it no longer uses nondisclosure agreements with local officials in areas where it builds, a practice that has become a major source of public opposition.