Technology
Illinois Governor Targets Data Center Tax Breaks For Proposed Pause
Rolling out a proposed $56-billion state budget for 2027, Illinois Gov. JB Pritzker (D) is calling for a two-year pause on tax incentives for new data centers to evaluate impacts on the power grid and potential of increased utility costs.
The proposed suspension, set to begin in July, would put a hold on tax incentives for new projects while state agencies evaluate the overall impact of existing and planned facilities on energy infrastructure, consumers and the larger economy.
To qualify for Illinois’ current data center tax abatements, facilities must invest at least $250 million over 60 months and create a minimum of 20 high-paying jobs, while also meeting specified efficiency and sustainability standards. Eligible projects receive exemptions from multiple state and local taxes as well as other local taxes. Additional construction wage credits may be available for projects in underserved areas.
State records show 28 applications submitted between 2019 and 2024 and, with all but one approved for the program, according to the state Data Center Investment Report. Developers and operators with projects include Digital Realty, NTT, Microsoft, Equinix, Iron Mountain, Stack, CoreSite, T5, QTS, Aligned, CyrusOne, Serverfarm and EdgeConneX.
As of May 2025, Illinois has 201 data centers and investment totaled nearly $15.8 billion, according to the state.
Under the proposal, state agencies would analyze how data center growth affects power generation and transmission needs and whether associated infrastructure buildout could shift costs to ratepayers.
In 2019, Pritzker signed and promoted the bipartisan tax incentives intended to attract large data center investments, highlighting their importance to the state’s infrastructure and economy.
Gov. JB Pritzker touted benefits of a CyrusOne data center at a 2024 groundbreaking in Aurora, Ill.
Photo courtesy of CyrusOne
Jack Lavin, president and CEO of the Chicagoland Chamber of Commerce, issued a statement opposing the data center tax credit pause, which he said, “will eliminate a proven economic development tool.”
In another proposal intended to spur residential housing development, Pritzker seeks $250 million in capital funding to support infrastructure grants that would cover below ground costs such as water and sewer lines, gas lines, stormwater drainage systems and electrical conduits for residential sites. The grants for developers or local governments would reduce the financial burden of those costs, according to the state.
A recent study shows that Illinois has a housing shortage of 142,000 homes and needs to build 227,000 more housing units over the next five years to resolve the shortage.
All measures require approval by the Democratic-led Illinois General Assembly.
