NC Ends Data Center Power Tax Break, Keeps Capital Incentives

North Carolina has eliminated its sales tax exemption on electricity purchased by data centers while keeping tax breaks for equipment and capital investments. The change, signed into law as part of the state's 2026 budget, is expected to increase state revenue by millions of dollars annually and reflects lawmakers' concerns about electricity demand growth from expanding AI infrastructure. For data center operators, the repeal shifts the focus from subsidized power consumption to other factors like power availability, transmission capacity, and the ability to get electricity delivered on schedule. The policy change signals a broader trend where states may become less willing to subsidize long-term electricity use while still encouraging data center construction and capital investment.