H.R. 10102 would impose a federal electricity tax of 1 cent per kWh on data centers, generating an estimated $1.76 billion annually for housing, conservation, and infrastructure.

H.R. 10102 would impose a federal excise tax on data center electricity at a rate of 1 cent per kilowatt-hour, generating an estimated $1.76 billion annually to support housing, conservation, and infrastructure. The legislation targets facilities exceeding 1 MW of power capacity and directs the resulting revenue to five federal funds.

Rep. Andrea Salinas (D-Ore.) introduced the Data Center Community Reinvestment Act of 2026, which would amend the Internal Revenue Code to establish the levy on qualifying data centers. The measure was referred to the House Ways and Means Committee, with additional referrals to the Energy and Commerce Committee and the Science, Space, and Technology Committee. The proposal emerges amid rapidly expanding AI and cloud computing workloads that are driving substantial increases in electricity demand, intensifying debates over who should bear the costs of infrastructure and community impacts tied to data center expansion.

Salinas stated that the bill aims to prevent communities from shouldering the costs of rising data center demand while ensuring they share in the economic benefits. “Every community deserves to drive a hard bargain with data center developers, and at the end of the day, every community deserves to share in the benefits from data center growth,” she said in a press statement.

The proposal builds on a state-level precedent established by Virginia earlier this year. Virginia became the first state to levy a tax directly on data center electricity consumption, setting the rate at 1.1 cents per kilowatt-hour effective July 1. The tax applies to electricity supplied by utilities and retail providers, as well as self-generated power, including behind-the-meter generation. State budget documents project approximately $600 million in annual revenue for the state’s general fund. While the federal bill proposes a slightly lower rate applied nationwide, it diverges from Virginia’s model by allocating revenue to five dedicated federal funds rather than a general fund.

Neil Osnato, founder of Persistence Analytics Group, noted that while the tax could significantly impact large data center operators, its broader implications hinge on whether electricity consumption accurately reflects the costs individual facilities impose on the grid. Under continuous full load, a 100 MW data center would face an annual tax of approximately $8.76 million; a 500 MW facility would owe about $43.8 million; and a 1 GW campus would incur roughly $87.6 million. At a 90% annual load factor—representing actual average usage relative to maximum capacity—those figures would drop to approximately $7.9 million, $39.4 million, and $78.8 million, respectively.

Osnato said the tax could influence data center siting and power procurement at the margin, particularly when operators evaluate jurisdictions with comparable power economics. However, for the largest AI and hyperscale projects, factors such as access to executable megawatts, transmission availability, interconnection timelines, generation supply, and development certainty will likely outweigh the tax itself. If a facility’s base electricity price is 5¢/kWh, the proposed tax would increase the energy component by 20%. At 10¢/kWh, the addition would be 10%, Osnato noted.

The legislation defines a data center as a facility primarily housing electronic equipment for processing, storing, or transmitting digital information, with a maximum rated power capacity or total peak power load exceeding 1 MW. Osnato cautioned that the proposal should not be conflated with a cost-causation mechanism designed to assign electricity system expenses to the customers responsible for them. “The bigger issue is cost causation,” Osnato said.

Two 500 MW data centers could draw identical amounts of electricity yet impose vastly different costs on the grid, depending on their geographic location, how their demand aligns with system peaks, required transmission and substation upgrades, the need for new generation procurement, and operational flexibility, he explained. “A flat federal consumption tax does not distinguish among any of those conditions,” Osnato said.

Data centers already contribute to multiple layers of the electricity system, paying for energy, transmission, distribution, and capacity costs, alongside customer-specific interconnection or construction fees in certain cases. The central policy question, Osnato noted, is whether current mechanisms adequately capture the electrical impacts of new large-scale loads. “A federal tax does not substitute for that analysis,” he added.

The legislation would allocate one-fifth of annual receipts to each of five designated funds, including a new Energy Technology Trust Fund established by the bill. Salinas’ office projects approximately $1.76 billion in annual revenue based on current nationwide data center electricity consumption, translating to roughly $352 million per year for each of the five funds. According to the legislative release, the Energy Technology Trust Fund would finance federal loan guarantees for clean energy, advanced nuclear, and grid infrastructure projects.

People’s Counsel David S. Lapp acknowledged that the proposed tax could boost federal revenue for public-benefit programs but argued it does little to address how data center expansion is impacting electricity costs for existing ratepayers. “Those risks arise largely from existing PJM rules for the administration of its capacity market and transmission planning that, without necessary reforms, will force residential customers to subsidize massive data center growth,” Lapp told Data Center Knowledge.

Lapp emphasized that ratepayer protections must comprehensively address capacity, energy, transmission, and distribution costs. He recommended measures such as requiring data center operators to secure their own generation or accept curtailment, reforming PJM’s rules for allocating data center-driven transmission costs, and implementing large-load tariffs with enhanced consumer safeguards.

The bill does not establish a separate tax rate specifically for AI data centers. Instead, the levy applies uniformly based on electricity consumption by any facility meeting the 1 MW threshold. This threshold ensures the proposal extends well beyond the largest hyperscale AI campuses, potentially capturing smaller colocation, enterprise, and institutional data centers with a maximum rated capacity or peak load exceeding 1 MW. According to Salinas’ office, the legislation also encompasses electricity generated onsite.

Osnato stressed that policymakers must distinguish between raw electricity consumption and its downstream consequences for grid infrastructure. “The questions that matter are: Is the projected load real? When will it actually materialize? How durable will it be? What generation, transmission, and local infrastructure does it cause?” Osnato said. He further advised that policymakers must differentiate between customer-specific and genuinely regional costs, while evaluating whether a facility’s operational characteristics amplify or alleviate system strain. “Megawatts are not interchangeable,” Osnato said.

Osnato argued that customer-specific costs should be borne by the entities that generate them, while genuinely shared system costs should be distributed proportionally to the extent benefits are systemwide. The proposed bill, however, relies on electricity consumption as a proxy for the costs and impacts of data center expansion, channeling revenue into five federal programs that lack direct ties to the local or regional electricity infrastructure serving those facilities. Only the Energy Technology Trust Fund maintains a direct energy linkage, though its proceeds would finance federal loan guarantees rather than directly fund the local or regional grid infrastructure necessitated by the taxed facilities. “Policymakers could collect money from the right industry while still allocating the underlying grid costs incorrectly,” Osnato said.

Should the legislation pass, its amendments would take effect for electricity consumption and tax collections occurring after the date of enactment. Following its August 13 referral to the three House committees, the proposal remains in the introduced stage.

Shane Snider is Senior News Writer at Data Center Knowledge, covering AI infrastructure, hyperscale data centers, cloud platforms, and the power and energy systems driving modern compute expansion. His reporting focuses on the operational, economic, and environmental forces reshaping digital infrastructure, including AI factories, utility constraints, liquid cooling, renewable energy procurement, and next-generation data center architectures. He has won recent Azbee awards for news series and government reporting. Based in Raleigh, North Carolina, Snider covers how hyperscalers, utilities, chipmakers, and infrastructure providers are responding to these shifts.