Illinois still has opportunities to lead in technological innovation and economic growth, says Pritzker, but it also has a responsibility to protect working families and local communities as the data center industry rapidly expands.

“I am directing my administration to pause the processing of data center agreements while we continue working with the General Assembly and stakeholders on a comprehensive framework that protects affordability, safeguards our natural resources, and ensures responsible growth across Illinois,” he said in a press release. “I look forward to continuing these conversations and getting this done the right way.”

Pritzker said conversations about reforming data center development and placing guardrails around the industry should include legislators, consumer advocates, labor organizations, environmental stakeholders, utilities, local governments, and industry leaders.

As part of the proposed restrictions, the governor’s office says data centers must pay their fair share of electricity, water, and infrastructure costs through a dedicated rate class and cost allocation system; ensure grid reliability by requiring data centers to go temporarily black when they do not provide sufficient clean energy and for data centers to generate or fund new clean energy resources to meet their own energy needs rather than shifting costs onto ratepayers.

In addition, data centers should obtain comprehensive water permits, disclose water use, and ensure their operations do not deplete Illinois water resources or pollute air. 

Pritzker also is seeking a ban on non-disclosure agreements between data centers and local governments, requiring them to post public notice when applying for permits and mandating that they enter into community benefits agreements with the communities in which they are located and regularly report their energy and water use.

State records show 28 applications submitted for tax incentives between 2019 and 2024, with all but one approved for the program, according to the Data Center Investment Report. Developers and operators with projects in the state include Digital Realty, NTT, Microsoft, Equinix, Iron Mountain, Stack, CoreSite, T5, QTS, Aligned, CyrusOne, Serverfarm and EdgeConneX.

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, with additional construction wage credits possible for projects in underserved areas.

As of May 2025, Illinois has 201 data centers, with investment totaling nearly $15.8 billion, according to the state.

Any pause in data center tax incentives had been opposed by Jack Lavin, president and CEO of the Chicagoland Chamber of Commerce, who previously issued a statement saying it “will eliminate a proven economic development tool.”

More States and Cites Adding Restrictions

As ENR reported previously, Ohio Gov. Mike DeWine (R) recently paused his state's tax exemption for new data centers because costs had soared to over $1.5 billion in 2025 for the program.

Meanwhile, efforts to pause or prevent data center construction are gaining ground across the country. In a closely watched action, the New York state legislature on June 4 passed a one-year moratorium on permitting for data centers with peak demand of 20 MW or higher. The bill includes additional regulatory provisions, including labor rules and energy efficiency standards that set a minimum requirement for renewable power use; a community benefit outlay and mandates utilities to place large data centers in a separate service class.

The moratorium, which was lowered to one year from three in it original form earlier this year in a legislative compromise, awaits the signature of New York Gov. Kathy Hochul (D). She told reporters in late May, prior to the bill's passage, that a ban required “not a statewide approach necessarily, but it’s something I’m looking at intensely.”

In April, Maine's legislature passed an 18-month moratorium on development of 20-MW or larger data centers, but it was vetoed April 24 by Gov. Janet Mills (D), who had wanted a carveout for a $550-million data center redevelopment project in Jay, Maine. She did, however, sign into law a separate bill preventing data center projects from accessing state business development tax incentives.

In addition to New York and Maine, 14 states have introduced legislation calling for some sort of ban on data center construction, according to the National Conference of State Legislatures. Of those, six have failed to pass. 

In the absence of statewide legislation, city and counties have been passing their own bans, including Denver in May. And in Monterey Park, Calif., a ban proposal being decided on by voters through a ballot initiative—a first in the U.S.—appears to have passed.

Brian Turmail, vice president of Association and Brand Image for the AGC of America, notes in an email that “the politics vary from state to state as elected officials work to balance the need for economic development with a growing backlash to new data center projects based on a lot of misinformation. How such a pause will impact Illinois’ ability to remain competitive and add new jobs remains to be seen.”

With new data centers driving much of the current demand for construction projects and employment, Turmail adds, “imposing limits on new data center projects doesn’t just undermine needed upgrades to our technology infrastructure, it also threatens to undermine construction employment levels.” AGC is sharing information about the economic benefits of data center construction with its chapters and members, he notes.

The call to pause study tax incentives for data centers represents a turn-around for Pritzker who, in 2019, signed and promoted the bipartisan tax incentives intended to attract large data center investments, highlighting their importance to the state’s infrastructure and economy.

Existing agreements under the Data Center Investment Program in Illinois will be honored, the governor's office said.