Welcome back to Power Play! Every week, senior writer Molly Taft takes on one of this midterm season’s biggest issues: data centers. And, let’s be honest, there’s no issue that feels more like the future crashing into the present. These giant concrete and glass boxes are being built across the country at an astonishing pace, full of servers, cooling systems, and billions of dollars in computing power. They make our online lives possible, but they also bring complicated questions about electricity, land, jobs, taxes, and who really benefits. If you’ve got a question or a thought for this column, you can write to Molly at [email protected] or reach them securely on Signal at mollytaft.76. But before you do, let’s talk about something that might be about to change the rural landscape in a very big way.
On January 1, a new tax windfall will kick in that could benefit scores of rural data center projects across the United States. It’s all thanks to the One Big Beautiful Bill Act—yes, that’s the actual name—and it’s not exactly the kind of policy that makes headlines at your holiday dinner table. But it should. Starting next year, projects located in tracts of rural land across the country will become newly eligible for a specific set of corporate tax benefits under a program expanded by that bill. This is a very big deal for the data center industry. For years, the conventional wisdom has been that data centers need to be near cities, where fiber networks are dense, power is reliable, and major customers are just a short drive away. But that’s changing. Rural land is cheaper, tax incentives are often more generous, and local communities are eager to attract any economic development they can get. Now, with a new federal program layering on top of state-level sweeteners, the economics of building a billion-dollar data center in a rural area could shift dramatically. The official statement from Representative Jason Smith, chair of the House Ways and Means Committee, put it plainly last year: the new rules “may significantly lower barriers for large-scale, capital-intensive projects in rural areas—most notably hyperscale data centers.” He said the economic case for building these massive facilities in designated rural opportunity zones becomes “far more compelling.” In other words, the federal government is about to make it very attractive to pour concrete and stack servers in places that have often been left behind by the digital economy.
But hold on. Not everyone is convinced that this is the rural revival it’s cracked up to be. Experts who study tax policy and community development are warning that the results for rural communities could be mixed at best. Emily Kraschel, a tax policy analyst at Searchlight Institute, a public policy think tank, is cautious about the idea that more data centers automatically mean better communities. “Right now, the only requirement to get the benefits is capital investment,” she says. “However, that doesn’t guarantee that that money is necessarily creating jobs or creating a local economic boost. You’d be more sure of that with a more traditional factory that requires lots of workers. But with a data center, that assumption goes a little wonky.” That’s the key tension here. A traditional factory might employ hundreds or even thousands of people, many of them local. A data center, on the other hand, is not a factory in the old sense. It’s a building full of servers that mostly run themselves. Once construction is finished, the number of permanent jobs needed to run the place can be surprisingly small. A few dozen engineers, security guards, and maintenance workers might be enough to keep a hyperscale facility humming. So while building a data center brings some construction jobs and tax revenue, it doesn’t necessarily transform a struggling rural economy in the way that an automotive plant or a food processing facility might. That doesn’t mean the projects are worthless to local communities, but it does mean the old rules of thumb about economic development don’t straightforwardly apply.
This is exactly what makes the new policy so important—and so tricky. When the first Trump administration passed the original opportunity zone program, it was created with bipartisan support and designed to encourage investment in low-income census tracts. The idea was to give investors tax breaks if they put their money into struggling communities. It was a well-intentioned idea, though implementation was always messier than the marketing. Over time, opportunity zones have been criticized for steering too much money into high-end real estate and projects that would have happened anyway. Now, with the One Big Beautiful Bill Act, the program is being expanded again, this time with rural areas in mind. The new rules make projects in certain rural tracts eligible for benefits, and the effect on data center development could be enormous. Searchlight Institute, where Kraschel works, has been digging into the exact scale of what’s coming. Their researchers compared the locations of data center projects currently in development with rural census tracts that are eligible under the new program. WIRED exclusively reviewed the compiled research, and the findings are striking: more than 100 data centers in various stages of development in rural areas could qualify for these new tax benefits. And that’s a conservative number. Searchlight’s database included fewer than 700 data center projects that are planned or under construction, but other industry datasets put the total number of data centers in development across the United States at closer to 1,500. That means the true number of newly eligible projects is likely much higher. On top of that, the broader trend is unmistakable. Separate research from Pew found that while just 13 percent of currently operating data centers are located in rural areas, a majority of planned facilities—around 67 percent—are heading to rural areas. The countryside is not just a niche destination for data centers anymore. It is becoming the heartland of the new internet infrastructure.
So what does all this mean for the small towns and counties that are about to be on the front lines? On paper, it sounds great. A data center project can mean major new investment, construction jobs that last for a few years, higher tax revenue to fund schools and emergency services, and increased demand for local services like restaurants and hotels. For a county that lost its main factory decades ago and has been watching young people leave for the city ever since, the idea of a multi-billion-dollar facility appearing on a nearby farm can feel like a lifeline. Some communities are actively courting these projects, even rewriting zoning laws and offering deeper tax breaks in hopes of winning the next hyperscale campus. But there are real costs, too. Data centers are enormous energy hogs. They can stress local power grids, drive up electricity prices, and require huge new transmission lines to be built. They need water for cooling, or at the very least, complex systems to manage heat. They create noise, traffic during construction, and sometimes the green glow of thousands of blinking lights. And while the tax benefits to investors are real and immediate, the long-term benefits to local residents are uncertain. If a data center only brings a handful of permanent jobs, it’s not going to revitalize a main street. If it increases demand for housing, it could raise rents for existing families. And if the tax breaks are so generous that they outweigh the revenue the facility will generate, local governments could find themselves subsidizing the very companies that are supposed to save them. The watchword from researchers is cautious optimism, not celebration.
In the end, the new rural opportunity zone expansion is a test—a massive, possibly very expensive test—of what we think economic development in rural America should look like. Supporters believe that by removing financial barriers and giving investors more confidence, the program will unlock capital for projects that never would have been built otherwise. They see data centers as a natural fit for rural areas because they don’t require a large local workforce, they bring high-value infrastructure, and they can coexist with existing land uses like agriculture. Critics see something else: a way for wealthy investors and huge tech companies to get a better return on projects they were likely going to build anyway, while rural communities are left with the noise, the power demand, and the environmental burden without the kind of job creation that actually changes lives. The truth, as usual, is probably somewhere in between. Some rural data centers will bring genuine benefits to their host communities. Others will be little more than a tax shelter dressed up in the language of rural renewal. But starting January 1, the incentive structure comes into effect, and developers will begin making decisions based on these new rules. The projects that follow will reshape parts of the American countryside for decades to come. That’s why Power Play will keep watching. If you’re in a rural community facing a potential data center project, Molly wants to hear from you. You can email them at [email protected] or reach them securely on Signal at mollytaft.76. Because the most important question isn’t just whether these tax breaks will be used—it’s who they will truly serve. And that, more than anything, is what this midterm season should be about.
