Georgia Representatives have voted in favor of suspending tax breaks for data centers while a special commission reviews grid capacity in the state.

House Bill 1192; Sales and use tax; certain high-technology data center equipment; prohibit issuance of new certificates of exemption passed the house 96-71 this week. The bill now heads to the Georgia Senate.

QTS data center in Altanta – QTS Realty Trust

Introduced earlier this month, the bill would suspend the issuance of any new sales and use tax certificates of exemption for data center projects in the state. This pause will run from July 1, 2024, to June 30, 2026.

The tax exemptions would still apply to data center contracts entered into before July 1, 2024.

The bill also creates a Special Commission on Data Center Energy Planning. The commission will review the existing grid and energy supply, and make recommendations around expanding grid capacity & transmission infrastructure and siting data centers. The commission shall submit a report of its findings and recommendations after the June 2026 date.

Georgia has given data center operators an exemption from the state’s sales tax since 2018. Companies receive a tax break if they hit certain thresholds relating to investment and job creation. The exemptions were due to stay in place until 2028, but were subsequently extended to 2033.

Republican Representatives John Carson, Charles Martin, and Shaw Blackmon sponsored the suspension bill. The vote to pass was led by the Republicans, who voted 86-10 in favor. Only 10 Democrats voted for the bill, with 59 voting against.

“This is an immense subsidy for an industry that takes up a tremendous amount of resources, power and water,” Blackmon, R-Bonaire, chairman of the House Ways and Means Committee, said on the House floor Tuesday, according to Capitol Beat.

“We have signaled to this industry that Georgia is open for business,” said Rep. Matthew Gambill, R-Cartersville. “Please don’t change the game at midstream and say Georgia is closed to business.”

The move comes after utility company Georgia Power said last year it needed to build more infrastructure to provide an additional 3,400MW of power and meet demand. It pinned 80 percent of this demand on the state’s data center ecosystem.

Earlier this month Republican Jon Burns, speaker of the Georgia House of Representatives, said: “These centers currently are using a disproportionate amount of our state’s energy.

Atlanta is a major data center hub; companies including Microsoft, CoreSite, QTS, DataBank, Flexential Switch, DC Blox, Edged Energy, Stack, T5, Vantage, EdgeConneX, and others have campuses in operation or development in and around the area.

Get a weekly roundup of North America news, direct to your inbox.