Governor JB Pritzker has called for a pause on data center tax incentives in Illinois.

Following recent reports of the plans, Pritzker called for a two-year suspension of tax incentives offered to develop data centers during his budget proposals this week.

“We need to think critically about our future energy usage with the needs of Illinois households at the forefront,” Pritzker said. “So, in the face of rising demand and surging prices, I’m proposing a two-year pause on authorization of new data center tax credits. With the shifting energy landscape, it is imperative that our growth does not undermine affordability and stability for our families.”

The governor is proposing a pause for any new data center tax credits from July 1 to allow state departments to “study the effectiveness of these tax incentives, the electricity excise tax structure, and their impact on state revenues.”

“While 37 projects have been constructed since inception, recent changes in the Illinois energy landscape require a more detailed review of the data center tax credit program,” the budget report said.

He also said that regional grid operator PJM “must force data center developers to pay for capacity resources to power their operations to protect consumers from higher rates.”

Pritzker added that following an executive order designed to speed up building new clean nuclear power, his goal is to deliver “at least two gigawatts of new clean nuclear capacity.”

Illinois currently provides tax abatements for facilities that hit certain investment and employment thresholds. Qualifying facilities must invest $250 million over a 60-month period and create at least 20 high-paying jobs. Facilities must also meet certain efficiency and sustainability standards.

Qualifying data centers are entitled to an exemption from the Retailers’ Occupation Tax Act, the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, all locally-imposed retailers’ occupation taxes administered and collected by the Department of Revenue, and the Chicago non-titled Use Tax for up to 20 years. Some facilities may also receive additional credit on construction wages if located in an underserved area.

According to the 2024 investment report, 28 applications were submitted between 2019 and 2024, with 27 granted. Companies with qualifying projects include Digital Realty, Stack, NTT, CoreSite, T5, Microsoft, QTS, Aligned, CyrusOne, Serverfarm, Equinix, Iron Mountain, and EdgeConneX.

Chicago is one of the US’ major data center markets, with more than 1GW of operational IT capacity, according to Cushman & Wakefield’s 2025 global data center market comparison. CBRE’s 2025 report suggests there is 691.7MW of wholesale capacity within Chicago, with a vacancy rate of 2.4 percent, and some 243.6MW of capacity under construction.

CBRE notes, however, that many new data center projects in the area being served by ComEd face power delivery delays until 2031 or later.