Data centers promise tax gains for Georgia. Are they delivering?

Data centers aren’t all that aesthetically pleasing. They often do not produce many permanent jobs. And they’re typically huge power and water hogs.

But when pitching a data center, there’s one argument every developer makes — it will generate tax revenues like nothing else.

As Big Tech has faced pushback from communities about the hulking projects and concerns over rising energy bills, developers have leaned into big financial promises. The expensive projects filled with valuable computer equipment will pump gushers of new tax revenue into state and local coffers, they say.

In Northern Virginia, the world data center capital, officials in some counties have rolled back property tax rates on residents because of the server farm windfall.

In Georgia, which is much newer to the data center game, the tax revenue tsunami, however, hasn’t fully landed. At least not yet.

The mayor of Covington, east of Atlanta, has said a developing Amazon complex could produce so much revenue the city might grant a 100% homestead exemption on owner-occupied residences.

Credit: Courtesy Amazon Web Services / Noah Berger

Credit: Courtesy Amazon Web Services / Noah Berger

But there are also questions being raised about whether state sales tax exemptions and county property tax breaks used to recruit the projects are paying off or are even necessary, especially when many of the builders rank among the richest companies on the planet.

“These are not job generators — these are real estate tax generators,” said Lynn McKee, the director of the commercial real estate program at Georgia State University. “So you would be stupid to give away a bunch of your real estate taxes.”

A 2018 study by the Michigan-based W.E. Upjohn Institute for Employment Research found that local and state incentives rarely are the deciding factor in a company’s decision to locate or expand. The study estimated that 75% to 98% of the time, a company granted incentives would have made the same choice without subsidies.

A recent University of Georgia study echoed that finding, estimating that 70% of all data center projects likely would’ve come to the Peach State without state incentives. Georgia’s data center subsidies forgo hundreds of millions of dollars in potential sales tax revenue each year, an incentive that grows larger as data centers become bigger and more prevalent.

Tech giants seem to have noticed that delivering tax revenue promises could help quell local opposition. Microsoft announced Tuesday it will no longer pursue local tax breaks. This comes after local Georgia government agencies have provided tens of millions in property tax breaks to the company over the years.

Credit: Miguel Martinez-Jimenez

“We’ll pay our full and fair share of local property taxes, adding revenue to local towns and cities,” Microsoft Vice Chair and President Brad Smith wrote in the announcement.

The promise of cutting residential taxes has enticed Georgia leaders. Covington Mayor Fleeta Baggett on Tuesday told Channel 2 Action News her city has “a real opportunity to eliminate city property taxes for individual homeowners” because of a future Amazon data center. That effort would need approval from both Covington’s City Council and the state Legislature.

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Georgia’s tax revenue projections are also muddled by questions on whether counties are properly valuing the computing campuses once they’re built. Complaints about undervaluing commercial property are particularly acute in Fulton County, something the assessor’s office there has denied.

But critics say Fulton often under-assesses large commercial properties, leaving millions of dollars in potential taxes uncollected.

“These data centers, they’re clearly coming in assessed at a tiny fraction of what these things are worth,” said Julian Bene, a former board member for Invest Atlanta, the city’s development authority. “We’re arguing about huge amount of money because if they tax the guts, the innards, properly, we would be looking at (millions of dollars).”

In the meantime, some residents who live near data center construction sites say they’re seeing all of the negatives, while the long-term benefits aren’t guaranteed.

In Union City, trees have been clear-cut and power poles raised for a new Microsoft data center.

The $1.8 billion project will span 2.1 million square feet when complete. The Development Authority of Fulton County granted the project a $75 million tax break, estimating that local governments will still collect $198 million in new taxes despite the abatement.

Credit: Miguel Martinez-Jimenez

“I’ve heard some very disingenuous statements to the effect of, ‘Well, you want all these nice things, so how do you think things will be paid for?’” said Wanda Mosley, a community activist who lives nearby. “I think that’s so offensive because given a choice, no one is going to settle for the hell that they have to live through to get it from a data center.”

‘Table stakes’

Competition is often at the crux of economic development.

States or even counties can be pitted against one another to try to woo projects that are deemed desirable.

Taxpayer-backed incentive programs have become the tool of choice for many states looking to stand out. At least 37 states have some form of an incentive for data centers, according to UGA’s recent study.

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Georgia lawmakers have codified two sales tax exemption programs for data center companies: one for large or hyperscale projects and another for bulk computer equipment purchases.

“That’s just table stakes,” Pete Marin, CEO of Buckhead-based data center developer T5, said of the incentive programs. “That’s how you play the game.”

Credit: Miguel Martinez-Jimenez

That game isn’t cheap, and it’s often debated whether Georgia taxpayers would be better served by sitting on the sideline.

The UGA study analyzed Georgia’s hyperscale program, which consistently forgoes hundreds of millions of dollars in potential sales tax revenue. The incentive waived nearly $433 million in taxes in 2025, UGA found, and is projected to forgo more than $700 million every year starting in 2027.

For states, data center incentive programs are almost always tax losers, said Subodha Kumar, founder of the Center for Business Analytics and Disruptive Technologies at Temple University. But because most states have similar programs, it’s something industry leaders say is needed to remain competitive.

“If you don’t want to have data centers, reject all (the incentives) and don’t build any more power,” said Raul Martynek, CEO of data center developer DataBank. “Guess what, the data center sector will adapt, and we’ll go somewhere else.”

Georgia House Speaker Jon Burns said reevaluating the state’s sales tax breaks for data centers is “an ongoing discussion” after Gov. Brian Kemp in 2024 vetoed a bill to pause the program.

“A lot of people have made decisions based on those tax credits,” Burns said. He also noted Georgia’s power grid and other resources as factors. “But that’s a discussion we’ll have on down the road.”

Credit: Arvin Temkar/AJC

Kasia Tarczynska, a senior research analyst at left-leaning incentives watchdog Good Jobs First, calls this economic competition for data centers a “race to the bottom.” She said elected officials often feel pressured to give up more and more to win projects, even if the juice isn’t worth the squeeze.

“The idea of an incentive is to encourage a business to do something that it was not going to do because of some risk,” she said. “Data centers are such a massive growth (industry) that there’s no reason why state and local governments should provide incentives.”

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UGA’s study found the statewide incentive is a net fiscal drain on Georgia’s tax revenue, but it estimates positive economic impacts in other ways, such as jobs and construction activity. After publication, the state Department of Audits and Accounts — which commissioned the UGA report — revised its summary of the study’s jobs and economic impact projections, lowering both.

Statewide tax revenue losses also do not nullify the property tax gains reaped by local governments.

“It’s effectively a tax sourcing question,” said Christopher Kimm, an executive at data center operator Equinix. “You’re moving it from the sales tax at the state level to the property tax at the local level.”

Local bets

Evaluating local benefits is harder than judging the effectiveness of statewide programs because counties and cities are not a monolith.

Local governments have different property tax rates, existing revenue streams and land use considerations. They also can offer their own tax breaks and incentives, which can partially offset tax gains.

To try to balance out some of the variables, the UGA study averaged four metro Atlanta data center campuses into a “representative” project alongside their tax rates and incentive amounts. It found that the average center generates about 4.8 times more tax revenue than was abated.

But not every project is the average, because some have no local incentives and others get tax breaks worth tens of millions of dollars by themselves.

“The primary benefit these facilities have on the state or local economy is tax revenue,” the UGA study said. “However, fiscal benefits are significantly reduced when governments abate a large portion of those taxes.”

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The Marietta City Council in June approved the rezoning for a $630 million data center, a project city leaders say is the largest in its history. Daniel Cummings, assistant city manager for economic and project development, said it is projected to generate more than $5 million in property tax revenue in its first operating year, adding that the city is not considering any local tax incentives.

He said the project will uniquely benefit Marietta because of its utility setup.

“Unlike many cities, Marietta operates its own electric utility, the Marietta Board of Lights and Water, that will significantly benefit from this project,” he said in an email. “The data center is expected to become one of its largest customers.”

Credit: City of Marietta

Officials in Habersham County, a mountainous area in Northeast Georgia, are also considering their own $300 million data center proposal. Bruce Palmer, a former county commissioner, said elected officials can’t ignore a potential windfall of new tax revenue.

His county of about 47,000 residents has a shortage of firefighters. He said new funding to bump salaries could tip the scales.

“Having something where the taxes received outweigh the cost of services is a really good thing,” he said.

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Other Habersham residents like Seth Herrin are less confident the tax revenue is worth the pressure on the area’s electric grid and water resources. He said rural areas should focus on job creators.

“I’m all about providing folks jobs,” he said. “But if you’re just going to go in and sap up all the resources and not provide that many jobs, I don’t see the point in that.”

Paying their fair share

Sarah-Elizabeth Langford, executive director of the Development Authority of Fulton County, said many of the county’s largest data centers are still in their early years of development, so the tax revenue surge will take time to materialize.

As an example, she used the Edged Atlanta data center complex at Tilford Yard, a former rail yard that paid no property taxes. It’s now projected to generate $65 million over the next 10 years despite her authority granting a $32 million tax break.

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With one of three data centers built, the site is currently assessed at about $21 million.

“The early indicators are extremely promising in terms of increasing the tax base and tax revenue for the county,” she said.

Credit: Courtesy Endeavour / Edged Energy

But local tax generation hinges on properties being assessed at the promised value. That doesn’t always happen.

In 2018, the AJC and Channel 2 analyzed 264 multimillion-dollar commercial property sales from 2015 to 2018 and found about two-thirds sold for at least 50% more than the county said they were worth that same year. Of those, 119 properties sold for more than double their assessed value.

Bene, the former Invest Atlanta board member, said those valuation issues remain pervasive and include data centers.

“The appraisers seem to ignore what the developer said the value of the property was going to be when they go before (development authorities) for a tax break,” he said. “You’ve got that information. Why aren’t you using that as part of your appraised value?”

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Fulton Chief Appraiser Roderick Conley said in a statement that the county’s commercial assessments “align with standard mass appraisal established by the state and were found to be in compliance based on the state’s 2024 sales ratio study.”

A 200,000-square-foot operating data center off Selig Drive in southwest Atlanta by DataBank is valued by the county at $16 million. DataBank paid about $10.9 million three years ago when it bought the site to build its facility.

Credit: Miguel Martinez-Jimenez/AJC

A four-building data center campus near the Fulton jail by QTS, which company officials have called a multibillion-dollar investment, is valued by the county at about $223 million.

McKee, the Georgia State professor, said data center investments are mammoth up front, but it’s unclear how well they hold their value.

“The issue with data centers at this point is the obsolescence issue,” he said. “A data center five or 10 years from now, built to today’s standards — what is it going to be worth? That’s what nobody knows.”

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Niki Vanderslice, president and CEO of the Fayette County Development Authority, has overseen the recruitment of another QTS campus, one of Georgia’s largest data center projects under construction. One building, an AI facility for Microsoft, is complete, while QTS made public a state filing Tuesday to begin work on its second data center.

Credit: Courtesy of Microsoft

The multibillion-dollar project now pays $1.2 million in property taxes, up from $36,000 in 2021 when the project was first being planned.

“I expect that in 2027 or 2028, the community will start to realize the benefits of (QTS’) contribution to the tax digest,” Vanderslice said.

Even though data centers have become more valuable, doubts remain whether the tax revenue promises will materialize as promised.

“To some extent, we’re in uncharted territory,” Bene said. “But we also know the game. These guys are very good at getting their way.”

— Staff writer Michelle Baruchman contributed to this report.

Editor’s note: The story has been updated to clarify the state Department of Audits and Accounts revision to its summary of UGA’s December 2025 study.

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