State Data Center Legislation: 2025–2026 Trends in Tariffs, Incentives, Water and Moratoriums

Data center policy is now a standing item in most statehouses. MultiState, a government affairs firm that tracks state bills, counted more than 200 data center bills introduced in more than 40 states in 2025, and more than 300 filed in over 30 states in just the first six weeks of 2026.¹ The National Conference of State Legislatures reported in May 2026 that states had considered more than 150 bills on data center energy consumption alone that year.¹⁵

Most bills do not pass, and many that pass are narrower than introduced. The useful question for site selection is not how many bills exist but which enacted rules change the cost, timing or permitting path for a specific parcel. Four themes account for most of what has become law: large-load tariffs and cost allocation, incentive reform, water planning and reporting, and moratoriums. Local fights often drive these bills, as described in contested data center projects.

The most common enacted theme is making very large customers carry the cost of serving them. Oregon’s POWER Act (HB 3546), signed in June 2025, directs the Public Utility Commission to create a separate class for “large energy use facilities” of 20 MW or more, including data centers.⁶

Texas took a reliability-led approach. Senate Bill 6, signed June 20, 2025, defines large loads as 75 MW or more (the PUCT may lower that), requires disclosure of duplicate requests elsewhere in the state, and adds interconnection study fees and co-location rules.⁷ It also requires large non-critical loads on the ERCOT transmission system to accept curtailment during firm load shed.¹⁶ The PUCT adopted its implementing large-load interconnection rule on September 18, 2026, setting a flat $100,000 study fee for every large-load request and dropping the non-refundable $50,000-per-MW interconnection fee it had proposed in March.⁸ The details are covered in Texas Senate Bill 6.

Others followed in 2026. Florida’s SB 484, signed May 7, 2026, bars utilities from passing data center costs to residential and small business customers, applies to large loads of 50 MW or more and preserves local zoning authority.² Oklahoma’s HB 2992, signed in May 2026, requires electricity suppliers to set separate terms and conditions for new loads of 75 MW or more.¹⁷ Minnesota’s 2025 law also bars shifting the cost of new power plants built for data centers onto other customers.¹²

For a site, these laws mostly affect contract demand, minimum bills, collateral and curtailment exposure, which in turn affect how much power a buyer will commit to and where. See data centers and electricity ratepayers for the cost debate itself.

The second theme is a retreat from open-ended tax breaks. MultiState reported early in 2026 that Virginia, Georgia and Oklahoma had proposals to reduce or eliminate data center credits.¹ Several states then acted, mostly through budgets and executive action rather than stand-alone bills:

• Virginia kept its sales tax exemption but imposed an energy consumption tax of $0.011 per kWh on data center electricity, effective July 1, 2026, expected to raise up to $600 million a year.³
• Arizona’s budget, signed by Gov. Katie Hobbs in 2026, put a three-year moratorium on new data center sales tax breaks.⁹
• Illinois Gov. JB Pritzker directed the Department of Commerce and Economic Opportunity to stop processing new Data Center Investment Program agreements as of July 1, 2026.¹⁰
• Massachusetts paused data center tax incentives to study impacts, which Bloomberg Law counted as the fourth state in recent months to pause sales tax exemptions.¹¹

Pauses generally protect facilities already certified, but they change the economics of new sites that were counting on an exemption. The state-by-state detail is in data center sales tax exemptions by state, and the broader trade-off is in tax incentives vs. power costs.

Water is the most discussed and least legislated of the four themes. Minnesota’s 2025 data center law, passed in a special session, requires facilities that would use more than 100 million gallons of water a year for cooling to consider conservation measures before receiving a water use permit.¹² The same law requires large data centers to pay $2 million to $5 million a year toward energy conservation programs for low-income customers, and extended the state’s sales tax exemption for data center equipment.¹²

California went the other way on disclosure. AB 93 would have required data centers to report expected water use to their water supplier when applying for a business license and actual annual use on renewal. Gov. Gavin Newsom vetoed it, saying he was reluctant to impose rigid reporting requirements on the sector without understanding the full impact.¹³

Even where no statute applies, water questions are increasingly settled through state permits and local agreements. The practical guidance is in water rights and groundwater permits and water usage effectiveness.

Until 2026, moratoriums were a local tool. That changed when two states acted. Maine’s legislature passed LD 307, which would have barred new data centers with loads of 20 MW or more until November 1, 2027; Gov. Janet Mills vetoed it in April 2026 after lawmakers did not add an exemption for a proposed project in Jay.¹⁴

New York went further. Its legislature passed the Responsible Data Center Development Act (S10642/A11560) in June 2026, a one-year pause on permits for data centers of 20 MW or more.⁵ Instead of acting on the bill, Gov. Kathy Hochul issued Executive Order No. 62 on July 14, 2026, directing the Department of Environmental Conservation to pause discretionary state permits for new or expanded data centers of 50 MW or more until a generic environmental impact statement is complete or one year passes, whichever is first.⁴ Applications already complete were not affected, and local permits are outside the order.⁴ As of late August 2026, sponsors were still urging the governor to sign the broader bill.⁵

Local moratoriums remain far more common; screening for them is covered in data center moratoriums and local restrictions.

State law rarely kills a good site outright, but it can change who pays for the substation, how long the power contract runs, whether an exemption is available and whether a state permit is on hold. A practical checklist:

1. 01Find the load threshold that applies in the state and where the project sits relative to it.
2. 02Ask the utility whether a large-load tariff is approved, pending or proposed, and what term, minimum bill and collateral it implies.
3. 03Confirm the status of any incentive the pro forma assumes, including pauses, sunsets and certification deadlines.
4. 04Check state and local water permit triggers, and whether conservation plans or reporting are required.
5. 05Check whether a state moratorium, executive order or pending bill could reach the project’s permits, and whether complete applications are protected.
6. 06Recheck all of the above at signing; several measures discussed here were still being implemented or awaiting action in October 2026.

Confirm specifics with the utility, the state agency and counsel, since rules are changing quickly. BlackForge tracks these changes as part of each screen; you can get a site reviewed or see how sites are evaluated in our methodology.