Nevada lawmakers could hit pause on data centers, end their tax breaks

Nevada lawmakers will consider a bill in 2027 that would end the state’s tax breaks for AI data centers and issue a statewide pause on building or expanding facilities.

Members of the state’s interim standing committee on revenue agreed to draft the bill at a meeting last week in a 6-2 vote, setting the stage for a fight over big tech in Carson City.

“When the state steps in, it kind of sets a standard of what will be, rather than what have been the local fights or one-offs,” said Sen. Dina Neal, D-North Las Vegas, who chairs the committee and brought the item forward.

Data centers continue to be a hot topic across the state and nation, worrying community members about water use, energy demands, pollution and more. Northern Nevada and particularly Storey County is, by far, the state’s biggest market with the fast-growing Tahoe-Reno Industrial Center.

Currently, Nye County is Nevada’s only municipality that has banned data centers outright, solely within a specific hydrographic basin that is one of the state’s most overstressed.

Because of local moratoriums on evaporative cooling systems in Southern Nevada, no new data centers that let water evaporate are permitted in Clark County. Only closed-loop systems that reuse water for cooling can move forward in Southern Nevada, but a handful of water-intensive facilities were built before those rules materialized in 2024.

Energy remains a significant concern. According to public filings from NV Energy, data centers could account for 64 percent of its sales by 2046, up from 5 percent this year.

The utility has acknowledged that data center demand will likely require the state to punt on its state-mandated clean energy goal of sourcing at least 50 percent of their electricity from renewable energy.

“I’m moving on this because I believe it’s in the best public policy interest of 3 million Nevadans to have a conversation about water, to have a conversation about electricity, to have a conversation about future generations,” Neal said.

Two Republicans vote no

The state’s data center tax abatement program, which Neal’s bill would amend, has come under scrutiny as of late.

As it stands, data center developers can cash in on a 75 percent abatement of the tax on personal property, including business equipment, over 10 or 20 years if they meet certain requirements.

It is now an election issue, with Democratic gubernatorial candidate Aaron Ford recently pledging to end tax abatements. Incumbent Gov. Joe Lombardo, a Republican, has been generally supportive of data centers and has not committed to a pause on abatements, though he is evaluating their community impacts.

The two lawmakers who dissented at Wednesday’s meeting were Assemblymembers Lisa Cole and Jason Patchett, Republicans from Clark County.

Rather than an outright revocation of the abatement program and a pause on approvals, Cole said she would prefer legislation that would help counties or cities negotiate development agreements and continue with abatements that are only offered to data centers with solutions to questions about water and power.

“Nevada, to me, is positioned right now to win the lottery in one of the largest drivers of economic growth in the world,” Cole said.

Storey County Commissioner Clay Mitchell spoke during public comment, saying his county was likely to bring its own bill forward on the topic. He said, like Cole, his preference is to modernize the abatement structure to be more reflective of the state’s needs instead of scrapping it all together.

Mitchell told lawmakers that an estimated 8,000 to 10,000 union trade workers have high-paying jobs at the Tahoe-Reno Industrial Center, including workers from Southern Nevada. The typical pay can be up to $180,000 a year, he said.

According to Mitchell, these jobs can last up to 20 years if enough demand exists.

“That provides a unique opportunity for the construction trades,” Mitchell said. “It gives them stability and longevity. It allows them to really settle into the communities, which is pretty unique for the construction industry. And the last thing that we would want to see is this prosperity grind to a halt.”

Contact Alan Halaly at @AlanHalaly on X.