Rural data centers are heading into a new tax landscape. Starting on January 1, projects built in certain rural tracts may become eligible for corporate tax benefits through an expanded opportunity zone program under the One Big Beautiful Bill Act.
The change arrives as data center development is increasingly moving beyond cities and into rural communities. The central question is not only whether companies can benefit, but whether the communities hosting these projects will see the kind of economic gains policymakers expect.
What changes on January 1
The expanded program applies to projects located in eligible rural opportunity zones. According to a statement from Ways and Means Committee chair Jason Smith last year, the new rules “may significantly lower barriers for large-scale, capital-intensive projects in rural areas—most notably hyperscale data centers.” He also said “The economic case for building data centers in designated rural opportunity zones becomes far more compelling” under the new program.
Opportunity zones were created during the first Trump administration after a bipartisan group of lawmakers proposed a program that would offer tax benefits to companies building in certain low-income census tracts. Last year, the One Big Beautiful Bill Act changed the program to attract more investment to rural areas.
For data center builders, the fit is clear on paper. Data centers are expensive, land-intensive projects. A program designed around capital investment can therefore become highly relevant to companies weighing where to put new facilities.
Why data centers are in focus
Searchlight Institute researchers compared data center projects in development with rural census tracts eligible under the new program. WIRED reviewed that research and found more than 100 data centers in different stages of development in rural areas that could be eligible.
That number may be conservative. Searchlight used a database of under 700 planned or under-construction data center projects. Other datasets put the number of US data centers in development closer to 1,500.
The rural shift is also broader than one tax program. Research from Pew found that 13 percent of operating data centers are in rural areas, while around 67 percent of planned facilities are going rural. That contrast helps explain why the expanded opportunity zone program is drawing scrutiny now.
Companies may choose rural sites for several reasons. The source article points to cheaper land and moving away from community opposition as possible factors. Tax benefits could become another factor, especially for companies with lower public profiles than the largest technology firms.
The local benefit is not guaranteed
The promise behind opportunity zones is straightforward: encourage investment in places that need it. But experts cited in the source article warn that data centers complicate that assumption.
Emily Kraschel, a tax policy analyst at the Searchlight Institute, said: “Right now, the only requirement to get the benefits is capital investment.” She added that this does not guarantee the money will create jobs or a local economic boost. In her view, that assumption is easier to make with a traditional factory than with a data center.
The issue is the difference between building a large project and building a lasting workforce. Data centers may generate jobs during construction. But the source article notes an ongoing debate about whether they create a long-term employment base after construction ends.
Nathan Jensen, a government professor at the University of Texas-Austin, compared the incentive to something companies would naturally consider. He said he would be “very surprised” if some companies were not thinking about rural opportunity zones when choosing locations. His summary was blunt: “It’s essentially free money.”
Big tech keeps its distance
The opportunity zone expansion is emerging during a wider backlash over data centers. Tax breaks have become part of the argument, particularly when some of the most powerful companies in the world are involved.
The source article cites Amazon’s attempt to negotiate for a lower tax bill on one of dozens of data centers planned in Mississippi. It also notes a New York Times report that Meta is writing off data center equipment under a federal tax break intended for research and experimentation.
WIRED contacted Meta, Amazon, Microsoft, and Google about whether they planned to use the expanded opportunity zone benefits for data centers in potentially eligible areas. Microsoft, Meta, and Amazon denied using the program. Google did not respond.
Microsoft’s general counsel of infrastructure legal affairs, Rima Alaily, said the company “does not use the opportunity zone program to invest in the purchase or construction of its data centers.” Amazon spokesperson Julia Lawless said the company “does not actively seek out” land in opportunity zones and has not claimed the tax benefit for its projects.
Lawless also said: “If we locate in one of these areas, it's because our site selection criteria—from available land to access to talent—aligns with tracts that governments across all levels have previously identified for economic development; not because we utilized the OZ benefit.” She added: “We have not used this program for our site selection and have no plans to add it to our criteria for our future decisionmaking process.”
The policy fight ahead
The politics are already shifting. Last month, Senator Josh Hawley introduced legislation that would eliminate opportunity zone funding for data centers, saying it would help “ensure Big Tech companies don’t get tax breaks to build data centers on farmland.”
Still, eligibility is not the same as actually receiving the benefit. A project being located in a rural opportunity zone does not automatically unlock the tax break. The company must create a specialized investment vehicle to begin the process.
There is also limited transparency. Because the tax break can be treated as confidential IRS data, the public may not know which companies are using it unless those companies disclose that information themselves.
The larger concern is what policymakers want the program to accomplish. The government says expanding the opportunity zone program to rural areas will cost an estimated $40.9 billion over the next decade. If the goal is simply to attract capital investment, data centers may fit. If the goal is durable job creation, experts say the answer is less clear.
Kraschel framed the choice directly: “Lawmakers need to decide what they really want out of these investments.” Her questions point to the core tension: should the program move data centers away from population centers, reward capital spending, or require clearer local economic benefits such as jobs?